Better Buy: Archer Aviation Stock vs. Joby Aviation Stock
Summary
Parkev states he recently upgraded the rankings on Joby Aviation and Archer Aviation, deeming them worthwhile for investors with a very high-risk tolerance. The video compares these two EVTOL (Electric Vertical Take-off and Landing) companies head-to-head to determine which is a better investment. Parkev identifies a massive market opportunity for EVTOLs, especially in densely populated cities plagued by severe traffic, like Los Angeles, where people would be willing to pay a premium for faster travel.
Both companies are in the early stages, requiring significant regulatory approval and extensive testing to prove safety and functionality. They are currently money-losing enterprises with substantial cash burn. Parkev emphasizes the importance of evaluating cash flow over net profit for early-stage companies, as cash flow determines their need to raise additional capital. Both companies have robust cash reserves from prior capital raises during market euphoria, providing them a long runway for development. Despite their high-risk nature, Parkev believes both are undervalued based on discounted cash flow (DCF) analysis.
Parkev notes Joby has an early advantage in scale, reporting $116 million in trailing 12-month revenue compared to Archer's $6.9 million. It also exhibits a lower cash burn with a -500% cash flow from operations, significantly better than Archer's. Joby possesses a stronger balance sheet with $2.26 billion in cash and short-term investments. Parkev calculated a fair value for Joby Aviation at $8.80 against a current market price of $6.34, suggesting approximately 39% upside over the next 12 to 18 months, with much larger upside long-term.
Archer Aviation has a lower trailing 12-month revenue of $6.9 million, but significant acquisitions, including assets from Boeing, are expected to substantially boost its top line. The company has a higher cash burn rate, with -7,800% in cash flow from operations. Archer maintains a robust balance sheet with $1.568 billion in cash and short-term investments, secured during favorable market conditions. Parkev's DCF valuation suggests a fair value of $7.16 for Archer Aviation compared to its current market price of $5.48, indicating about 30% upside over the next 12 to 18 months, with greater potential for longer-term investors.
When comparing them, their forward price-to-sales ratios are very similar (Archer at 29.6, Joby at 28.7). If forced to choose only one, Parkev would select Joby Aviation due to its larger scale, stronger balance sheet, and slightly better upside according to his DCF model. He reiterates that these are very high-risk investments suitable only for investors with a very high-risk tolerance, offering potential for explosive long-term returns.
Mentioned Stocks
Reasoning: Parkev recently upgraded Archer Aviation's ranking, informing investors with a very high risk tolerance that the risk versus reward is now worthwhile. While Archer has lower trailing 12-month revenue ($6.9 million) and a higher cash burn rate (-7,800% cash flow from operations), it has made significant acquisitions, including assets from Boeing, which will add significantly to its top line. Archer maintains a robust balance sheet with $1.568 billion in cash and short-term investments. Parkev calculated a fair value for Archer Aviation at $7.16, with a current market price of $5.48, suggesting about 30% upside over the next 12 to 18 months, and much larger upside longer term.
Reasoning: Parkev recently upgraded Joby Aviation's ranking, informing investors with a very high risk tolerance that the risk versus reward is now worthwhile. Joby has an early advantage in scale with $116 million in trailing 12-month revenue and a lower cash burn rate (-500% cash flow from operations) compared to Archer Aviation. It also boasts a stronger balance sheet with $2.26 billion in cash and short-term investments. Parkev calculated a fair value for Joby Aviation at $8.80, with a current market price of $6.34, suggesting approximately 39% upside over the next 12 to 18 months, and much larger upside longer term. If forced to pick one, Parkev would choose Joby due to its larger scale, stronger balance sheet, and better upside based on his discounted cash flow model.