Joby Aviation plans to go public through Reinvent Technology Partners (RTP) SPAC, while Archer Aviation will go public through Atlas Crest Investment (ACIC) SPAC. Both of the reverse merger deals are expected to close in the second quarter of 2021. RTP and ACIC are currently trading below their IPO price of $10 per share.
RTP has fallen 42 percent from its 52-week highs. ACIC is also down over 47 percent from the highs. Which of these is a better space exploration SPAC stock to buy now after the crash?
RTP and ACIC stocks are falling.
RTP stock is down 28 percent over the last three months, while ACIC stock is down 12 percent. The stocks are down despite there being no analyst downgrades or company specific news.
The significant decline can be attributed to the broad-based sell-off as investors switched from high-growth to value and cyclical stocks. This is mainly because rising treasury yields and high valuations have made growth stocks less attractive to investors. Investors are handling SPAC stocks cautiously after learning about the SEC’s investigation into blank-check transactions.
Cathie Wood’s space exploration ETF
ARK Investment Management CEO Cathie Wood owns shares of RTP and ACIC SPACs. The move suggests that Wood is betting big on urban air mobility. The Ark Space Exploration and Innovation ETF (ARKX), which Wood backs, owns 1.1 million shares of RTP SPAC worth $10.9 million. The ARKX ETF also owns 0.4 million shares of ACIC SPAC worth $4.2 million.
Joby Aviation versus Archer Aviation
Joby Aviation plans to operate as a commercial passenger aircraft starting in 2024. The company has a first-mover advantage in the aerial ridesharing market with over 1,000 test flights completed in the last decade. Joby has entered into a strategic partnership with Toyota Motor to produce aircraft. The FAA (Federal Aviation Administration) approval is expected in 2022. Over the next decade, Joby estimates to have over 14,000 vehicles generating $20 billion in sales with a presence in about 20 cities globally.
Archer Aviation also plans to launch an air taxi service by 2024. The company expects to certify with the FAA and start volume production by 2023. Archer has formed strategic partnerships with United Airlines and Stellantis. United Airlines has already placed an order for $1 billion of the startup’s aircraft with an option to purchase an additional $500 million of aircraft.
Outlook for space exploration
The space industry is expanding rapidly. Bank of America projects that the growing space economy will nearly triple in size over the next decade. It estimates to reach $1.4 trillion in 2030 compared to $424 billion in 2019.
RTP or ACIC: Which is a better SPAC stock to buy?
The RTP and Joby Aviation merger valued the combined entity at a pro forma equity value of $6.6 billion. In the investor presentation, Joby Aviation said that it expects to post revenues of $721 million in 2025, which would mean a 2025 price-to-sales multiple of 9.2x.
It expects to be EBITDA positive in 2025 and expects to post an EBITDA of $185 million in 2025, which would mean a 2025 enterprise value-to-EBITDA multiple of 25.0x.
To put that in perspective, Archer Aviation expects to post revenues of $1 billion in 2025 and an EBITDA of $255 million in that year. This would mean a 2025 price-to-sales multiple of 3.6x, which is lower than Joby Aviation. As a result, ACIC stock looks like a good buy based on its attractive valuations and growth outlook.