Small investors can now take a flier on one of the leading companies working to give people the option of commuting crosstown by air. Shares of the electric air taxi developer Joby Aviation commenced trading on the New York Stock Exchange on Wednesday after completing a reverse merger with Reinvent Technology Partners, a listed blank check company controlled by LinkedIn cofounder Reid Hoffman and Zynga
Outside the NYSE, Joby showed off a prototype of its unique five-seat electric aircraft—the product of 12 years of secretive development work in the woods of northern California—which it trucked cross-country for the occasion. Joby founder and CEO JoeBen Bevirt will be traveling back home with $1.1 billion more in the company’s coffers from the merger and an accompanying private share sale to institutional investors.
Those proceeds are down from the $1.6 billion initially expected, after investors who controlled 62% of the shares in Reinvent Technology Partners chose to cash out before the deal closed with the shares trading just above RTP’s $10 IPO price, amid a cooling of enthusiasm for special purpose acquisition vehicles, or SPACs, including those involving air taxi startups.
Nonetheless, Bevirt says that the $1.1 billion raised, combined with the roughly $500 million in cash that his Santa Cruz, California-based company had on hand as of March 31, is all the money he needs to start manufacturing his novel aircraft, which is designed to take off like a helicopter and then tilt its six rotors forward to fly like an airplane; prove its safety to federal regulators by the end of 2023, which would likely make it the first electric air taxi to be certified for passenger service in the U.S.; and, if all plays out as Bevirt hopes, launch an aerial ride-sharing service in a handful of as yet undisclosed U.S. cities starting in 2024. Joby is projecting that it will burn through roughly $1.1 billion from 2021 through the end of that year.
Bevirt says that Joby is prepared for the pressure of quarterly reporting and the baleful eye of Wall Street analysts. “We’ve laid out a plan for what we’re going to execute on over the coming years,” he told Forbes. “We need to build credibility by delivering.”
Easing that pressure will be unusually long restrictions on the sale of stock by insiders. Joby’s prior investors (including key backer Toyota Motor), which hold the majority of the combined company, as well as the executive team and RTP’s principals, will have lockups on their shares extending over a five-year period in which stock will be freed up in tranches on a yearly basis, with full vesting for RTP’s founders coming only when the share price reaches $50, implying over a $30 billion market capitalization.
Bevirt has ambitious goals to match the envisioned market cap: With an aircraft that he says will be capable of carrying four passengers and a pilot 150 miles on a single charge, Bevirt aims to develop air taxi networks that will enable urbanites worldwide to soar over traffic-snarled streets at a price to passengers of $3 per mile, cheaper than an Uber Black ride. At broad adoption, he sketches out a vision of significantly reducing greenhouse gas emissions while allowing much of the streetscape to be converted to restaurants and parkland.
The financial projections have been lofty as well: Joby and RTP told investors it will start earning a profit by 2026 on $2 billion in revenue, and 10 years from now, it will be generating $20 billion in revenue with 14,000 aircraft flying in 20 cities.
Joby isn’t the only air taxi developer to make big projections to SPAC investors about its future financial performance: California’s Archer Aviation, which struck a deal in February to merge with Atlas Crest Investment Corp., has predicted $12 billion in revenue in 2030. In a sign of investor skepticism as the Securities and Exchange Commission takes a closer look at SPACs, Atlas Crest and Archer last month announced a “strategic reset” for their deal that reduced the pro forma valuation of the resulting company by 38% to $1.7 billion. Shares of Atlas Crest and Qell Acquisition Corp., which has agreed to merge with German air taxi startup Lilium, are both trading below the typical $10 a share redemption level for SPACs.
All the air taxi hopefuls face a steep hill in convincing civil regulators that their novel aircraft are safe to carry passengers—the FAA has yet to certify electric aircraft of any kind, let alone vertical takeoff and landing (VTOL) ones. It’s expected to proceed cautiously, threatening the startups’ ambitious launch schedules, and their bankrolls, with the possibility that it may require safety modifications that add weight and hamper performance in ways that undermine the economic viability of the aircraft.
The startups also face the tall task of winning public acceptance to fly their aircraft in city skies and build vertiports where people live.
But Joby has already won airworthiness certification from the U.S. Air Force, and it will be booking solid revenue over the next few years—and gaining valuable real-world operating experience—through a program in which the USAF will test use of EVTOL aircraft for cargo delivery, medical evacuation and search and rescue. Bevirt says he expects to operate piloted cargo flights through the Agility Prime program—till now Joby has only conducted remote-controlled test flights of its aircraft—and it could also be the venue for the company’s first passenger flights.
Joby has been awarded $40 million through the Air Force initiative and expects to win contracts worth an additional $100 million.
While much remains to be proven about the capabilities of its aircraft, Joby last month said it had achieved its range claims, flying its prototype 150 miles on a single charge, including an energy-draining vertical takeoff and landing, though without the payload of any passengers onboard and piloted remotely from the ground.
It also says it’s achieved significant reductions in noise compared to helicopters, which should help it win approval for vertiports in places where helicopters have been deemed too disruptive to fly.
Last month Joby released a video in which Bevirt held a noise meter showing the aircraft registering at 55 decibels while hovering above the ground 100 meters away—a little more than the length of a football field. That’s 1,000 times quieter than a helicopter at 90 decibels.
It also released a comparison of flyover noise.