Is Joby Aviation (JOBY) Poised to Surpass Market Doubts with FAA Certification and Defense Sector Expansion?

The electric vertical takeoff and landing (eVTOL) sector is on the cusp of a revolution, and Joby Aviation (JOBY) is positioning itself at the center of it. With a stock price that has surged 142% year-to-date as of August 2025, the company has become a lightning rod for both optimism and skepticism. Critics point to its $325 million net loss in Q2 2025 and a revenue of just $20,000 as red flags. But for investors with a long-term lens, the story is far more compelling. Joby's recent FAA certification progress, defense sector expansion, and strategic commercialization moves are creating a perfect storm of catalysts that could propel the stock well beyond current bearish price targets.

FAA Certification: The Final Hurdle Before Takeoff

Joby's path to commercialization hinges on clearing the Federal Aviation Administration (FAA) type certification process. As of Q2 2025, the company is 70% complete on its side of Stage Four of the certification program, with the FAA's contribution now over 50% complete—a 10-point jump from Q1. This progress is critical because Stage Four lays the groundwork for the final phase: flight testing with both Joby and FAA pilots to validate safety and performance.

The company has already begun assembling its first Type Inspection Authorization (TIA) aircraft, a milestone that signals the transition from design to real-world evaluation. Pilots are expected to begin flying this aircraft in 2025, with FAA pilots following shortly thereafter. If this timeline holds, Joby could secure certification by mid-2026, unlocking a flood of commercial opportunities.

Defense Sector Expansion: A New Revenue Stream with High Margins

While the commercial air taxi market remains speculative, Joby has found a more immediate path to profitability through defense contracts. The August 1, 2025, partnership with L3Harris Technologies to develop a gas turbine hybrid VTOL for military applications is a game-changer. This collaboration leverages Joby's S4 platform and autonomous flight technology (acquired via Xwing in 2024) to create an optionally piloted aircraft for low-altitude missions like contested logistics and electronic warfare.

L3Harris will handle missionization, adding sensors, communication systems, and autonomy features tailored for defense. Flight testing is set for fall 2025, with operational demonstrations in 2026. This partnership not only diversifies Joby's revenue streams but also taps into a market where government contracts provide non-dilutive funding and predictable margins. For a company burning through cash, this is a strategic masterstroke.

Commercialization and Production Scaling: Building for the Future

Joby's commercialization strategy is equally aggressive. The acquisition of Blade Air Mobility's passenger business for up to $125 million provides immediate access to key urban corridors like New York City and Southern Europe. Blade's 50,000+ customer base in 2024 is a ready-made audience for Joby's air taxi services. Meanwhile, agreements with Abdul Latif Jameel and All Nippon Airways (ANA) to deploy 300 aircraft globally underscore the company's ambition to dominate the urban air mobility (UAM) market.

Production scaling is another area of strength. The Marina, California, facility has expanded to 435,000 square feet, doubling output to 24 aircraft per year. The Dayton, Ohio, site is being prepped to eventually produce 500 aircraft annually. These expansions, supported by a $500 million investment from Toyota, position Joby to meet surging demand once certification is achieved.

Risk-Reward Profile: A High-Stakes Bet with High Rewards

Investors must weigh the risks. Joby's cash burn remains a concern, and delays in FAA certification could push commercial operations to 2027. However, the company's $991 million in cash and short-term investments as of June 2025 provide a buffer. The defense partnership with L3Harris and Blade acquisition add layers of resilience, reducing reliance on the still-uncertain commercial UAM market.

From a valuation standpoint, Joby's stock is trading at 18.5x book value, a premium to its peers but justified by its first-mover advantage in both commercial and defense eVTOL. Analysts have downgraded the stock due to near-term losses, but the market has already priced in the potential of FAA certification and defense contracts. If Joby clears these hurdles, the stock could see a re-rating to reflect its dual-sector growth potential.

Conclusion: A High-Volatility Play with Long-Term Upside

Joby Aviation is a high-risk, high-reward investment. The FAA certification timeline is the most critical catalyst, with success unlocking a $10 billion+ market opportunity in UAM alone. Meanwhile, the defense sector partnership with L3Harris adds a $100 million+ contract runway and validates Joby's technology in a high-margin niche.

For investors willing to stomach near-term volatility, Joby represents a unique opportunity to bet on the future of aviation. The company's strategic positioning—combining regulatory progress, defense expansion, and production scaling—makes it a standout in a sector on the brink of transformation. If the FAA gives the green light and the defense contracts materialize, Joby could easily outperform its bearish price targets and cement its place as a leader in the eVTOL revolution.