JOBY Stock: Embrace the Volatility and Keep Your Parachute Ready

Stocks to buy

Are you ready to get on board with a fascinating flying-taxi company in 2024? Before you consider taking a share position in Joby Aviation (NYSE:JOBY), make sure that you understand the risks involved. When all is said and done, JOBY stock earns a “B” grade for its notable mix of growth potential and sometimes startling volatility.

Perhaps it’s not entirely accurate to call Joby Aviation a manufacturer of flying taxis. Most likely, the company would prefer to refer to these vehicles as electric vertical takeoff and landing (eVTOL) aircraft. Call them whatever you’d like, but always bear in mind that Joby Aviation stock, not unlike a helicopter, can move up and down with impressive speed.

JOBY Stock Can Jump or Dump

Here’s an example of what could happen on any given trading day. On Dec. 1, Joby Aviation stock gained 10.4%, landing at $6.58. There wasn’t any important company-specific news on that day, nor was there any material update from the Federal Aviation Administration.

It was just a day when the market was in the mood to buy shares of small to midsize companies. As evidence of this, the Russell 2000 small-cap stock index jumped nearly 3% on Dec. 1.

There are two sides to this coin, though. Just as JOBY stock has bright green days, it also has startling red days. This year, the stock has been as low as $3.15 and as high as $11.98.

Still, if you want to get pure-play portfolio exposure to the eVTOL industry, there are only a few choices and they’re all somewhat risky. We’re not talking about trillion-dollar companies here. Besides, the eVTOL is still in its infancy, with regulatory hurdles to clear.

Take Note of Joby Aviation’s Improving Bottom Line

On the other hand, Joby Aviation stated that it has “84% of Certification Plans now accepted by” the FAA, this de-risks Joby Aviation stock to a certain extent.

Furthermore, Joby Aviation has a $131 million contract with the Department of Defense and delivered an aircraft to the U.S. Air Force “months ahead of schedule.” Frankly, it’s encouraging to know that this isn’t a pre-revenue company, and that Joby Aviation has the American government as a client.

Not only that, but Joby Aviation’s bottom-line results are clearly improving. In the third quarter of 2023, Joby Aviation reported net income of $1.525 million. That’s a whole lot better than the company’s disheartening $79.206 million net loss from the year-earlier quarter.

On a per-share basis, Joby Aviation posted an earnings loss of 14 cents per share in the third quarter of 2022, but then achieved breakeven (zero cents per share) in Q3 2023. Could per-share profitability be right around the corner? It’s a possibility to consider, so enterprising investors might want to keep an eye on Joby Aviation in the upcoming quarters.

Joby Aviation Stock: What’s Your Exit Strategy?

Not every up-and-coming business has achieved profitability or breakeven status. So, Joby Aviation deserves kudos for that. Yet, this doesn’t mean investors can afford to ignore the risks and volatility involved with Joby Aviation stock.

JOBY stock gets a “B” grade and can be appropriate for a small portfolio position, as long as you have an exit strategy. What will you do if the stock goes down 20%, 30% or more?

Will you use a stop-loss, put options or some other hedging method? No matter how you approach it, be sure to think about all possibilities. Then, consider whether you’re ready to take a position in Joby Aviation stock.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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