Why It’s Time to Get Out of Flying Car Stocks: 3 to Sell
The flying car market is one of the most hyped, anticipated sectors in the transportation industry. However, investors should be wary of the high risks and uncertainties involved in this nascent and unproven field.
True, some analysts predict flying cars will revolutionize urban mobility and create a multi-billion-dollar market. For example, the electric vehicle (EV) market is receiving record investment and has already established itself as a desired consumer product.
Yet others argue that the technology is still far from ready and faces many challenges. Therefore, investors who are looking for long-term returns and stability should avoid or sell these three flying car stocks before the year ends.
Archer Aviation (ACHR)
California-based Archer Aviation (NYSE:ACHR) develops electric vertical take-off and landing (eVTOL) aircraft for urban air mobility. The company has secured a $1 billion order from United Airlines and plans to launch its service in the near future.
Additionally, Archer Aviation received $215 million in new capital from Boeing, Stellantis, United Airlines, and Ark Investment. This followed its legal battle with rival Aero Wisk.
Archer Aviation appears to have a number of equity backers. The eVTOL firm is still pre-revenue, which means it share price and valuation are unjustifiable. The stock has rallied 177.5% since the start of the year. This number exemplifies the sheer speculation of this space. Investors should reap their returns now before equities investors begin to scrutinize Archer’s valuation.
Joby Aviation (JOBY)
Joby Aviation (NYSE:JOBY) is another California-based company aiming to create a scalable eVTOL aircraft that can carry passengers and cargo over short distances. Because it’s a player in a novel space, it’s received the attention of notable companies.
In 2020, Joby acquired Uber Elevate, Uber’s (NYSE:UBER) aerial ride sharing venture. Also, it received $75 million in equity capital from the gig e-economy giant. Similarly, Joby has entered a long-term partnership with Toyota. It will supply the JOBY with critical powertrain and actuation components.
Even with these positive developments, Joby Aviation has far to go before launching a functioning product that attracts enough customers. JOBY is still pre-revenue, and the uncertainty of future revenues makes it valuation and rally in 2023 untenable.
China-based EHang (NASDAQ:EH) designs and manufactures autonomous aerial vehicles (AAVs) for applications such as tourism, logistics, and emergency response.
Unlike the other entries on this last, EHang has delivered products and generated sales. And as of their latest fiscal quarter, EHang has delivered more than 15 AAVs, with more than 100 deliveries in their pipeline.
While the company is definitely operating a dynamic market, EHang’s AAVs are still novel and haven’t found the right product-market fit to create significant scale. The world’s second largest economy of China is still experiencing economic overhang from the COVID-19 pandemic as well as an ongoing property debt crisis. These could make it hard for EHang’s future growth. Thus, investors should definitely proceed with caution.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.