Investors are souring on flying car stocks as their commercialization phase approaches. Archer Aviation (NYSE:ACHR) stock has tumbled to $4.87, down 66% from its 2025 peak. Similarly, Joby Aviation (NYSE:JOBY) has fallen to $8.83 from its peak of $20 last year. 

Archer Aviation and Joby Aviation stocks have sunk | Source: TradingView

Both are now trading at their lowest levels in months, a move that has benefited short sellers. Benzinga data shows that ACHR stock has short interest of 123.3 million shares, equivalent to 18.6% of those outstanding. Similarly, Joby has a short interest of 15.4%, with investors having shorted over 100.7 million shares.

This positioning is happening as the companies advance in their certification process by the Federal Aviation Authority (FAA). They both expect that they will launch their aircraft later this year, with ramping expected to continue in the next few years.

The main concern among investors is that these companies have spent billions of dollars in recent years, diluting shareholders in the process. With profitability still some distance away, investors believe they will continue to raise capital in the foreseeable future.

Joby Aviation’s outstanding shares have increased from 604 million in 2021 to 980 million today. Similarly, Archer’s shares have risen from 157 million in 2021 to 757 million today. Their financing agreements suggest that dilution will continue. For example, Archer Aviation’s deal with Stellantis means the latter will fund Archer’s labor costs in exchange for newly issued shares.

In addition to dilution, investors are concerned about eVTOL’s future profitability model and margins. Archer Aviation expects that its second-quarter loss will be $170 million, while Joby’s loss jumped to $102 million in the first quarter. 

These fears explain why analysts tracking the companies have slashed their outlooks recently. Cannacord Genuity slashed its outlook for Joby’s shares to $11.5 from the previous $15.5. Similarly, Morgan Stanley and Needham also slashed its outlook. As a result, the consensus target among analysts is $11, slightly higher than the current’s $8.83.

Similarly, Canaccord Genuity, Needham, and Goldman Sachs slashed their estimates for Archer Aviation recently. 

Looking forward, investors will focus on the upcoming regulatory approvals, potential capital raising events, and the path towards the commercialization process.

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