RTP Stock Is Off Its Highs, Attractive Bet Before Joby Aviation Merger

Reinvent Technology Partners (RTP), a SPAC, saw its stock fall 2.1 percent on March 12. However, the stock is down 35 percent from its 52-week high. What’s the forecast for RTP stock before the SPAC merges with Joby Aviation? Will RTP rise or continue to fall?

The RTP SPAC is scheduled to take Joby Aviation public. Joby Aviation is a transportation company that develops an all-electric vertical take-off and landing (eVTOL) aircraft. The blank-check company is led by LinkedIn co-founder Reid Hoffman and Zynga founder Mark Pincus. The RTP and Joby Aviation merger is expected in the second quarter of 2021.

The RTP and Joby Aviation merger is expected to close by the end of the second quarter of 2021. The transaction, subject to approval by RTP shareholders and other customary closing conditions, is set to have a pro forma enterprise value of $4.63 billion. A voting date hasn’t been set. The combined company will be listed on the NYSE. However, the new ticker symbol hasn't been disclosed yet.

The deal will provide Joby Aviation with nearly $1.6 billion in gross proceeds to fund the company’s growth initiatives. That includes $690 million in cash held by RTP in trust and an additional $835 million in PIPE (private investment in public equity). Investors in the PIPE include Uber Technologies, The Baupost Group, and funds managed by BlackRock, Fidelity, and Baillie Gifford. Existing Joby Aviation shareholders are set to own about 76 percent of the combined company when the deal closes.

Joby Aviation plans to launch its air taxi services by 2024. The company expects to receive FAA (Federal Aviation Administration) certification in 2022. Joby Aviation has agreed to a “G-1” certification basis for its aircraft with the FAA.

Joby Aviation plans to introduce an affordable air taxi service starting in 2024 with more than 1,000 test flights conducted to date. The company formed a strategic partnership with Toyota Motor to manufacture aircraft and recently acquired Uber Elevate. In the next 10 years, Joby Aviation plans to have more than 14,000 vehicles generating $20 billion in revenue and a presence in 20 cities worldwide. The company expects sales of $721 million in 2025 and $2.1 billion in 2026. The company's 2026 adjusted EBITDA margin of around 40 percent looks good.

Joby Aviation faces the biggest competition from Archer. Archer plans to go public later this year through a reverse merger with the Atlas Crest Investment Corp. (ACIC) SPAC. Archer also plans to introduce an air taxi service in Los Angeles by 2024. The company has entered into key partnerships with United Airlines and Stellantis. Archer is forecasting revenues of $2.2 billion in 2026. The company expects an EBITDA margin of 29 percent in 2026. 

RTP valued Joby Aviation at a pro forma implied equity value of $6.6 billion. Meanwhile, at RTP’s current stock price, Joby Aviation is valued at around $7.3 billion. Archer is valued at $4.2 billion based on ACIC’s current stock price. From a valuation perspective, Joby Aviation is valued at a 2026 EV-to-sales multiple of around 2.3x, while Archer is valued at 1.2x.

RTP SPAC stock looks like a buy based on Joby Aviation’s strong growth outlook. Joby Aviation is a good bet on the future of UAM (urban air mobility) where air taxis are expected to play an interesting role. Joby Aviation thinks that UAM is a $1 trillion market. The company is looking forward to offering flights at the same price as ground-based taxis. However, the stock is a speculative play until the RTP and Joby Aviation transaction closes.