Joby Aviation's Valuation Under Pressure: A Selloff or a Strategic Entry Point for eVTOL Believers?

Joby Aviation (NYSE: JOBY) has faced a brutal reality check in Q2 2025. The electric vertical takeoff and landing (eVTOL) pioneer reported revenue of just $20,000—98.7% below the $1.57 million forecast—and a net loss of $325 million, or -$0.41 per share, missing estimates by 115.8%. The stock plummeted 3.12% in premarket trading, and the Zacks Rank has downgraded it to a #4 (Sell). Yet, for investors with a long-term horizon, this selloff may present an opportunity to assess whether the market is overcorrecting to short-term pain while overlooking the transformative potential of the eVTOL sector.

The Earnings Miss: A Symptom of the Sector's Challenges

Joby's Q2 results reflect the broader struggles of the eVTOL industry. The company's cash burn of $112 million—10% lower than Q1—highlights the capital-intensive nature of scaling a new transportation paradigm. While the $991 million in cash reserves (including a $250 million Toyota investment) provides some runway, the full-year 2025 cash burn guidance of $500–$540 million underscores the urgency of commercialization.

The earnings miss was driven by two key factors:
1. Revenue Shortfalls: Joby's revenue remains negligible as it focuses on certification and pre-commercialization. The company's $1.38 million full-year revenue forecast for 2025 is a far cry from the $17.34 billion eVTOL market projected by 2035.
2. Regulatory and Operational Delays: While Joby is 70% complete on its FAA certification process, delays in finalizing the TIA (Type Inspection Authorization) aircraft and securing infrastructure partnerships (e.g., vertiports) have pushed back revenue timelines.

The eVTOL Sector's Long-Term Promise

Despite the near-term pain, the eVTOL market is on track to grow from $0.76 billion in 2024 to $17.34 billion by 2035, with a compound annual growth rate (CAGR) of 27.6% from 2031–2035. This trajectory is driven by three megatrends:
- Urbanization: By 2050, 68% of the global population will live in urban areas, intensifying demand for congestion-free mobility solutions.
- Battery and Propulsion Innovation: Joby's 150-mile range and 200-mph speed, powered by advanced lithium-ion batteries, position it to outperform competitors like Archer Aviation (Midnight) and Vertical Aerospace (VX4).
- Strategic Partnerships: Joby's $41 million ATM facility, Toyota's $500 million investment, and its acquisition of Blade Air Mobility's passenger business provide critical infrastructure and market access in New York and Europe.

Joby's Competitive Position: A Leader with Execution Risks

Joby's strengths are clear:
- Regulatory Progress: 70% completion of FAA certification, faster than peers like Archer (15% compliance documents approved).
- Manufacturing Scale: The Dayton, Ohio facility, set to produce 500 eVTOLs annually by 2026, is a game-changer for cost efficiency.
- Defense and Hybrid Opportunities: A $600 million DoD contract and a hybrid gas turbine variant with L3Harris diversify revenue streams.

However, risks remain:
- Cash Burn and Profitability: Joby's $0.65 loss per share in 2025 and lack of revenue make it a speculative bet.
- Competition: EHang's EH216-S and Beta Technologies' ALIA-250 are advancing in China and North America, respectively.
- Public Acceptance: Noise, safety, and infrastructure challenges could delay adoption.

Is This a Buy? A Calculated Bet on the Future

The selloff has pushed Joby's valuation to a discount relative to its peers. While its EV/Revenue multiple of 37.8x (as of Q2 2025) is high, it pales in comparison to the 10.5x of traditional aerospace firms like Lockheed Martin. For long-term investors, this premium reflects the sector's speculative nature but also its potential to disrupt urban mobility.

Key Considerations for Investors:
1. Regulatory Milestones: A 2025 FAA certification would unlock commercial operations and justify a valuation re-rating.
2. Cash Runway: The $991 million in cash, combined with Toyota's support, provides a buffer until 2027.
3. Sector Diversification: Joby's defense and hybrid programs reduce reliance on the volatile passenger eVTOL market.

Conclusion: A High-Risk, High-Reward Proposition

Joby Aviation's Q2 earnings miss and analyst downgrades are a wake-up call for investors. The company's path to profitability is fraught with execution risks, regulatory hurdles, and intense competition. However, the eVTOL sector's long-term growth potential—driven by urbanization, technological innovation, and strategic partnerships—remains compelling.

For investors with a 5–10 year horizon and a tolerance for volatility, the current selloff may represent a strategic entry point. The key is to monitor Joby's progress on FAA certification, manufacturing scalability, and revenue diversification. If the company can navigate these challenges, it could emerge as a dominant player in the $17.34 billion eVTOL market by 2035.

Final Verdict: Buy for long-term believers in the eVTOL revolution, but only with a clear risk management strategy.