Joby Aviation $JOBY ( ▼ 5.12% ) fell sharply after unveiling plans to raise $1 billion through a mix of convertible bonds and stock, a move that will boost cash but dilute existing shareholders.
Convertible notes and discounted shares
The company is issuing convertible senior notes due in 2032, giving investors the option to convert debt into equity later. Reports say the notes carry a conversion premium of up to 30%, while the accompanying stock offering is being priced at a discount to recent trading levels.
That combination often pressures shares in the short term, as investors factor in potential dilution and the signal that more funding is needed.
Funding a production ramp
Joby has been investing heavily to scale up manufacturing, with plans to double aircraft output by 2027. The new capital is aimed at expanding facilities, equipment, and staffing to support that goal as it pushes toward commercializing its electric air taxi service.
While the company already had a sizable cash balance, the raise suggests management wants a larger financial cushion as it moves from development into higher-cost production phases.
High risk, high runway
Joby’s stock had performed strongly over the past year, outpacing some competitors in the air taxi space. But the business remains pre-revenue at scale and capital-intensive, meaning periodic fundraising is part of the growth story.
The latest drop shows that even in high-growth industries, markets can be quick to punish dilution, especially when commercialization is still a few years away.