January 30, 2025
Over the last several years, companies including Tesla , Rivian Automotive , and Nio were essentially synonymous with the term "electric vehicles." Each of these companies manufacture electric automobiles, which until recently were the primary form of transportation employing battery technology.
But a few years ago, a new type of electric vehicle flew into the spotlight. Known as electric vertical take-off and landing ( eVTOL ) aircraft, they mimic the capabilities of helicopters and drones. The main use for eVTOL aircraft is complementing traditional forms of mobility such as taxis, ride-sharing, and subways in densely populated areas.
Today, Joby Aviation (NYSE: JOBY) and Archer Aviation (NYSE: ACHR) are leading the eVTOL revolution. Both companies have made considerable progress in recent years, but I see one of these stocks as the clear winner. If you're considering a position in Joby or Archer for your portfolio this year, read on to find out which stock I think is the superior option.
If Tesla or Rivian serve as any example, building electric vehicles (EVs) is a long and expensive process. Joby has spent considerable capital developing prototypes of its aircraft, yet I think the company has done a good job easing liquidity concerns. Late last year, Toyota Motor committed to invest $500 million in Joby -- bringing its total capital invested in the eVTOL maker to nearly $1 billion.
Besides Toyota, Joby's other notable investors include Delta Air Lines and Intel . The company is also working closely with Uber because the two businesses have some obvious partnership opportunities in identifying more efficient mapping and routing plans in cities.
On top of this, Joby has also garnered interest from the Department of Defense, given the unique nature of its aircraft. An eVTOL is quiet and can travel for lengthy periods of time, making it an interesting new form of transportation for military operations.
Similar to its competitor, Archer has also fetched its share of investors within the airline and automobile industry, namely from United Airlines and Stellantis . Although Joby's relationship with the U.S. military is impressive, I think Archer may have a slight edge as it relates to defense operations.
The Defense Department has demonstrated a similar interest in Archer's aircraft. And the company recently formed a partnership with Anduril, a start-up specializing in autonomous systems for military drones and rockets.
The company's work with major airlines, automakers, and the U.S. military has helped Archer build a purchase order book in excess of $6 billion. Below, I'm going to dig into the financial profiles of Archer and Joby to help finalize my case for the better stock.
The chart below illustrates the market capitalization and revenue estimates for Joby and Archer.
As the numbers show, Joby's market cap is more than 1.5 higher compared to Archer's. And yet, Wall Street is expecting Archer to generate more than double Joby's revenue next year. In other words, Joby is valued at a considerable premium to Archer despite its more protracted growth profile.
While neither company has reached critical scale yet, Wall Street's forecast at least suggests that Archer is on a faster path to commercialization. At the end of the day, I see both companies as speculative opportunities.
But with the financial profiles above, I see Archer as the better option between the two eVTOL stocks given its more bullish profile and reasonable valuation compared to its closest peer.
Before you buy stock in Archer Aviation, consider this:
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