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Joby Aviation (NYSE: JOBY), a developer of electric vertical takeoff and landing (eVTOL) aircraft, hasn't impressed many investors since its public debut. It went public by merging with a special purpose acquisition company (SPAC) on Aug. 10, 2021, and the combined company's stock opened at $10.62. But today, it trades at about $8.

Joby disappointed its investors by missing its own estimates. It also faced stiff competition from other eVTOL makers as rising rates compressed its valuations. But of the nine analysts who cover the stock, five rate it as a buy, three rate it as a hold, and only one rates it as a sell. Its average price target sits at $7.47, while its highest price target has been set at $10.

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We should always take analysts' estimates with a grain of salt, but is it a good idea to buy Joby's stock while it's still hovering below $10?

A promising player in a nascent market

Over the past decade, many companies started to develop eVTOL aircraft as cheaper, greener, faster, and quieter alternatives to traditional helicopters. They would also be easier to land in densely populated urban areas.

Joby is an early mover in that nascent market. Its first commercial eVTOL aircraft, the S4, carries one pilot and four passengers, has a maximum speed of 200 mph, and can travel up to 100 miles on a single charge. It's also developing a hydrogen-powered version that could achieve five times the range of its current aircraft.

Joby started working with the U.S. Department of Defense (DOD) in 2016, and it holds a $131 million Agility Prime contract to deliver up to nine eVTOL aircraft to the U.S. Air Force. It delivered its first eVTOL aircraft to Edwards AFB last September, and it plans to deliver the next two aircraft to MacDill AFB in 2025.

Joby also attracted a big investment from Toyota (NYSE: TM) in 2020. Delta Air Lines (NYSE: DAL) -- in a move which mirrored United Airlines' investment in the eVTOL aircraft maker Archer Aviation (NYSE: ACHR) -- also invested $60 million in Joby to develop "home to airport" eVTOL flights in 2022.

Why hasn't Joby Aviation's stock taken off?

That support suggested Joby could scale up its fledgling business. But like many other SPAC-backed start-ups, it overpromised and underdelivered. In its pre-merger presentation, Joby claimed its revenue would surge from $131 million in 2024 to $2.05 billion in 2026. But in reality, it only generated $81,000 in revenue in the first nine months of 2024, and analysts expect $131,000 in revenue for the full year. They expect its revenue to climb to $23 million in 2025 and $97 million in 2026.

Looking back, it seems like Joby reported the full value ($131 million) of its Agility Prime contract as its projected revenue for 2024. That's a bright red flag since it should gradually recognize the revenue from that contract over multiple years.

Archer -- which delivered its first Midnight eVTOL aircraft to the U.S. Air Force this August -- is expected to grow its revenue from $593,000 in 2024 to $38 million in 2025 and to $185 million in 2026. In addition to Archer, Joby faces stiff competition from other start-ups, aerospace giants like Boeing, and even automakers like Hyundai in the eVTOL market.

A few green flags but lots of red flags

Joby's business is still growing. It's scaling up its worldwide business with the expansion of its operations in South Korea, the construction of an air taxi hub in Dubai, and the completion of its first air taxi flight in Japan with Toyota.

Earlier this month, Joby completed a series of major aerostructure tests to gain a certification from the U.S. Federal Aviation Administration (FAA). The FAA has been finalizing its rules for air taxi services over the past year, and that certification could help the company quickly launch its planned domestic air taxi routes with Delta Air Lines.

Those developments are encouraging, but Joby's insiders still sold nearly twice as many shares as they bought over the past 12 months. During the same period, Archer's insiders bought more than six times as many shares as they sold. Joby's CFO Matt Field, who led the company through its public debut, also recently stepped down.

Its valuation is another issue. With an enterprise value of $5.8 billion, Joby still trades at 60 times its 2026 sales. Archer, which has an enterprise value of $3.5 billion, trades at 19 times its 2026 sales. I don't think Joby should trade at such a premium to Archer unless it proves it can successfully scale up its business over the next two years.

Joby might seem like a good speculative play on the eVTOL market, but I wouldn't touch it until a few more green flags appear. For now, Archer Aviation looks like the better bet on the long-term growth of the eVTOL and air taxi markets.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.