Joby Aviation stock jumped after Nvidia deal: beware of key risks

Joby Aviation stock price jumped to $16.95 after the eVTOL company announced a new partnership with Nvidia, the biggest company in the world. It has now jumped by 250% from its lowest level this year, bringing its market capitalization to over $13.75 billion.

Joby Aviation and Nvidia partnership 

The main reason why the JOBY stock surged is that the company announced a new partnership with one of the most important companies in the United States.

This partnership makes Joby the only aviation partner for the new NVIDIA IGX Thor program, which is powered by the powerful Blackwell architecture.

Joby Aviation hopes that the new chip will advance its technology as it works on the Superpilot, its autonomous solution that will be in its military and civil platforms. The company’s flight research lead said: 

“Combining NVIDIA’s compute power with our world-class aircraft design, certification and rigorous flight testing capabilities, we’re enabling a new era of safety-first autonomy in aviation.”

Stocks always jump whenever they announce significant milestones and partnerships, especially with top companies like Nvidia that are leading the world in the technology space. However, at times, the initial gains are usually brief as the hype tends to fade away.

In Joby Aviation’s case, the enthusiasm about its partnership with Nvidia will likely face a test on November 5 when it publishes its financial results.

These results will provide more information about its development phase and its plan for the commercialization of its technology. The management has indicated that its plan is to start its commercialization in 2026, when it expects to start making money.

Joby’s commercialization involves operating its own air taxis services in some of the top cities in the US, Japan, Middle East, and other countries. Brazil is often seen as a company with substantial potential in the eVTOL industry.

Joby has made some progress in this, including its acquisition of Blade Air Mobility, a company that offers urban air mobility solutions, carrying over 50,000 passengers last year. This buyout means that the company will use Blade’s existing infrastructure to achieve that.

Additionally, the company will sell its products directly to military and commercial clients and ink partnerships for operating air taxi services.

In its most recent results, the company’s management highlighted its collaboration with L3Harris, a top defense contractor to build a new class of aircraft for the defense industry. It also mentioned that the Department of Defense had requested and received $9.4 billion to advance autonomous and hybrid aircraft.

Joby has key risks ahead

Still, Joby Aviation has numerous risks ahead. One of them is dilution as it will need a lot of money in the coming years to fund its operations. For example, the company recently sold shares worth over $591 million, increasing the supply of outstanding shares by 35 million.

The other risk is about its business strategy and whether it will achieve its goals as the eVTOL industry is still new. Besides, at $13 billion, there are signs that the company is overvalued since a company like United Airlines has a market cap of over $30 billion.

Joby Aviation stock price technical analysis 

The other risk that Joby Aviation stock faces is that it has formed a double-top pattern at $19.97 and a neckline at $12.7. This is one of the common bearish reversal patterns in technical analysis.

The Relative Strength Index (RSI) and the MACD indicators have continued moving downwards, a sign that it has formed a bearish divergence pattern.

Therefore, this performance means the JOBY stock price will likely give up the Nvidia gains and possibly retest the neckline at $12.7.

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