Joby Aviation stock price has gone vertical in the past twelve months, making it one of the best-performing companies in Wall Street. It has surged by 280% in the last twelve months, transforming it into a $16 billion company. 

Why Joby Aviation stock price has surged

There are five primary reasons why the Joby Aviation share price has surged in the last 12 months. 

First, the most recent reason is that the company acquired Blade Air Mobility’s air taxi business in a $125 million deal. This buyout is notable because it gives it acces to a network of 12 terminals in crucial markets like New York. 

Buying Blade will also make it easy for Joby Aviation to launch in new markets like Dubai. 

Second, the Joby Aviation stock has surged amid a positive regulatory environment in the United States. In June, Donald Trump signed an executive order on drones and lying cars. His administration will remove the regulatory burden, enabling companies to launch faster and at a lower cost. 

In Joby’s case, the company has already gone through most of the burdensome regulations. It now expects to receive all the approvals this year, and launch its commercial service in 2026. 

Third, the company is working to expand its business into the lucrative defense sector. In a statement last week, the company signed an agreement with L3Harris Technologies to explore opportunities to develop an aircraft that can fly autonomously. 

The new aircraft will be powered using a gas turbine and will be based on Joby’s S4 aircraft. Partnering with L3Harris is a big deal because of its scale. L3 is one of the biggest defense contractors with a backlog of over $34 billion.

Further, Joby Aviation stock price has surged because of its partnership with Toyota, one of the best-known manufacturers in the industry. Toyota has invested over $894 million and has committed to help it master the manufacturing process.

Finally, it has already signed multiple deals with some of the biggest companies in the industry. It has deals with companies like Delta Air Lines, US Air Force, ANA Holdings, Virgin Atlantic, and Uber. Joby also has a partnership with Dubai’s authorities to operate air taxis in the city. 

JOBY has substantial Risks

Still, Joby Aviation stock has potential risks, which explains why it has a short interest of 14.7%. This means that many investors believe that the stock has more downside ahead.

The other risk is that the company is currently overvalued, given its market capitalization of over $16 billion. Its valuation is based on the view that the company’s business model will work eventually. 

Besides, most estimates note that the eVTOL business will be a multi-billion-dollar industry. However, the reality is that these forecasts are based on assumptions since this is a new industry.

Finally, there is a likelihood that the company will take long before turning a profit, which will push it to dilute its shareholders more. 

Joby stock price analysis

JOBY stock chart | Source: TradingView

The other potential risk is that the JOBY stock price has become highly overbought. Its Relative Strength Index (RSI) has moved to the extremely overbought level of 83, while the Stochastic Oscillator has moved to over 90.

An overbought stock can continue rising over time. However, in most cases, they tend to pull back as some investors start to book profits. If this happens, the stock may crash to $12, its highest level in June 2023, which is 40% below the current level.

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