Imagine it's 1908. The world is filled with horses, buggies, and the occasional noisy, unreliable automobile. Someone comes to you and says, “I'm going to build a factory that produces thousands of standardized, affordable 'horseless carriages' for the masses. It will change how everyone lives, works, and travels.” That person was Henry Ford, and the idea seemed fantastical. Joby Aviation is making a similar, 21st-century pitch. Instead of replacing the horse, they aim to replace the soul-crushing city traffic jam. At its core, Joby is an aviation company building a new type of aircraft called an eVTOL (electric Vertical Take-Off and Landing). Think of it as a cross between a large drone and a small, whisper-quiet helicopter. It's designed to carry a pilot and four passengers, taking off and landing vertically like a helicopter but flying forward like a plane. The entire system is powered by batteries, making it electric, and theoretically, much quieter and cheaper to operate than a traditional helicopter. But Joby isn't just building the aircraft. Their grand vision is to operate a full-fledged aerial ridesharing service, much like Uber or Lyft, but for the skies. You'd use an app to book a flight from a “vertiport” on top of a building in downtown Manhattan to JFK Airport, soaring over the gridlocked traffic below in a matter of minutes, not hours. This is the seductive promise of Joby: a future of clean, fast, and accessible urban air mobility. It's a story of profound disruptive_innovation. However, for an investor, a compelling story is only the first chapter. The rest of the book—filled with balance sheets, cash flow statements, and risk assessments—is where the real work begins.
“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” - Warren Buffett
For a value investor, a company like Joby Aviation is a fascinating case study in risk, speculation, and the critical importance of one's circle_of_competence. While traditional value investing focuses on established businesses with predictable earnings and a strong economic_moat, Joby has none of these. It is a pre-revenue, pre-profit, and pre-certification venture. Therefore, analyzing Joby through a value lens requires a shift in focus from “what is it earning now?” to “what must be true for it to survive and eventually thrive?”
For a value investor, Joby matters because it is the acid test for the principles of discipline, risk management, and intellectual honesty. It forces you to confront the line between investing and speculating.
Since we can't use traditional valuation metrics, a prudent analysis of a developmental-stage company like Joby focuses on survival and the de-risking of its path to commercialization. This is less about calculating a precise value and more about creating a checklist of critical hurdles.
A value investor should approach Joby by asking a series of difficult questions. The answers will reveal the level of risk and the length of the odds.
Let's imagine two investors, “Speculator Steve” and “Value Valerie,” both looking at Joby Aviation.
Valerie concludes that while the technology is exciting, the investment risk is far too high and the outcome too uncertain. The current stock price does not offer a margin of safety for the enormous risks involved. She decides to watch from the sidelines, acknowledging that it is outside her circle_of_competence. She might miss out on a big winner, but she will also protect her capital from a potential total loss, which is the first rule of investing.