Vertical Aerospace Valuation Reassessed Amid Manufacturing Expansion and S&P Global BMI Inclusion

Vertical Aerospace's (EVTL) shares have risen 10% in the past month, driven by major manufacturing expansion and inclusion in the S&P Global BMI Index. However, with a year-to-date drop of over 50% and a rough track record over the past three years, momentum is only just starting to flicker. Based on the current price-to-book multiple, the company appears significantly undervalued, but persistent revenue shortfalls and ongoing net losses could undermine optimism and cast doubt on sustained momentum.

Vertical Aerospace Ltd (EVTL) has seen a 10% increase in its share price over the past month, driven by significant manufacturing expansion and its recent inclusion in the S&P Global BMI Index. The company's stock, which has been volatile in recent years, has experienced a year-to-date drop of over 50% and has faced challenges in maintaining consistent revenue and profitability. Despite these hurdles, the latest developments have sparked optimism among investors.

Manufacturing Expansion

Vertical Aerospace has announced the securing of initial VX4 aircraft assembly and battery production facilities to support certification and early production. The company's new manufacturing sites include an aircraft assembly facility at Cotswold Airport with a capacity to produce 25+ VX4 aircraft annually and a battery production facility at Avonmouth that will triple the company's battery production capacity Vertical Aerospace Announces Manufacturing Facilities and Updates on Path to Certification During Capital Markets Day^[2].

Certification and Financial Outlook

The company has reiterated its plan to certify the all-electric VX4 by 2028, requiring $700 million in funding to reach this milestone. Vertical's focused OEM business model, low operating costs, and efficient manufacturing plans contribute to its ability to project these requirements. The company's collaboration with regulatory bodies such as the UK Civil Aviation Authority (UK CAA) and the European Union Aviation Safety Agency (EASA) aims to streamline the certification process Vertical Aerospace Announces Manufacturing Facilities and Updates on Path to Certification During Capital Markets Day^[2].

Market Performance and Valuation

While Vertical Aerospace's stock has shown signs of recovery, the company's year-to-date performance has been challenging. The stock's price-to-book multiple suggests that it is significantly undervalued, but ongoing revenue shortfalls and net losses raise concerns about the sustainability of the current momentum. Investors are closely watching the company's ability to translate its technological advancements and market positioning into consistent financial performance.

Upcoming Events and Milestones

Vertical Aerospace has several key events and milestones planned for the coming months, including the completion of transition testing by the end of 2025, the start of VX4 prototype flight testing in April 2026, and the certification of the VX4 aircraft by 2028. These milestones are critical for the company's long-term growth and could further influence investor sentiment.

Conclusion

Vertical Aerospace's recent manufacturing expansion and inclusion in the S&P Global BMI Index have driven a 10% increase in its share price. However, the company's year-to-date performance and ongoing financial challenges suggest that sustained momentum remains uncertain. Investors should closely monitor the company's progress towards certification, its ability to generate revenue, and its overall operational efficiency as key indicators of its future performance.