Joby Stock Drops. Why Goldman Sachs Says Sell.

Joby Aviation stock is up about 61% over the past 12 months. Aircraft (Courtesy Joby)

Key Points

• Joby Aviation stock dropped 6.6% after Goldman Sachs initiated coverage with a Sell rating and a $10 price target.
• Joby’s market value is approximately $13 billion, about 10 times its estimated 2029 sales, with positive EBITDA not expected until 2030.
• Only 10% of analysts rate Joby stock a Buy, significantly lower than the S&P 500 average of 55%.

Joby Aviation stock fell on Monday after Goldman Sachs recommended investors sell the maker of electric vertical takeoff and landing aircraft.

Shares fell 6.6% to $13.48, while the S&P 500 and Dow Jones Industrial Average dropped 0.5% and 0.9%, respectively.

The drop came after Goldman launched coverage of the stock with a Sell rating and a $10 price target, according to FactSet.

“Joby….is focused on being a one-stop shop (OEM, supplier, operator), which means it has the largest market opportunity, but we believe the operator model will have regulatory hurdles and significant capital requirements,” wrote analyst Anthony Valentini on Monday. “The weight/payload of [Joby’s] aircraft has been debated, and capacity is currently limited, which makes us question the value ascribed to the lead in certification.”

Based on that, he called the stock overvalued.

The eVTOL aircraft promise quiet and cheap urban transportation. The technology is relatively new, though, and Joby’s eVTOLs aren’t certified for commercial service in the U.S.

Many investors still don’t know about the industry or how consumers will adopt the technology. But they do see potential.

Today, Joby has a market value of about $13 billion—roughly 10 times estimated 2029 sales, according to FactSet. The company isn’t expected to report positive earnings before interest, taxes, depreciation, and amortization, or Ebitda, until 2030.

Overall, one out of 10, or 10%, of analysts covering Joby rate the stock Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. Four out of 10%, or 40%, rate shares Sell. The average Sell-rating ratio is about 7%.

Like Goldman, valuation is one reason for Wall Street’s bearishness. The average analyst price target for Joby is about $13, a little below where the stock is trading.

The stock is up about 61% over the past 12 months. Realizing those gains has taken investors on a wild ride. shares have ranged from about $5 to $21.

Joby’s peer, Archer Aviation , might have been caught up in Goldman’s call as well. Its shares fell 4.2%.

Write to Al Root at allen.root@dowjones.com