Joby Aviation Inc. (JOBY) watched its stock crater Thursday after pricing an upsized capital raise that brought in more than $1.18 billion but left investors worried about dilution. The electric air taxi company is betting big on its future, and it's asking shareholders to come along for the ride.
The deal consisted of two parts: $600 million in convertible senior notes carrying a 0.75% interest rate and due in 2032, plus 52.86 million shares of common stock priced at $11.35 each. That's a bigger bite than originally planned—the company initially targeted about $1 billion total.
There's also a technical wrinkle here. Morgan Stanley (MS) is running what's called a "delta offering" of approximately 5.3 million borrowed shares. This helps investors who bought the convertible notes hedge their positions, which is standard practice in these transactions. The whole thing is scheduled to close on February 2, 2026.
How the Convertible Notes Work
The convertible senior notes are unsecured obligations that pay interest twice a year and mature on February 15, 2032. Investors can convert these notes into Joby stock at roughly $14.19 per share, which represents a 25% premium over the $11.35 price of the concurrent stock offering.
To cushion existing shareholders from dilution, Joby entered into "capped call" transactions with a cap price of $22.70 per share. These derivatives essentially limit how much dilution shareholders face if the stock price climbs significantly. The company is spending $55 million of the note proceeds on these capped call transactions.
All told, Joby expects to net approximately $1.16 billion from the offerings, assuming underwriters don't exercise their options for additional shares or notes. The remaining capital, combined with the company's existing cash reserves, will fund the push toward FAA certification, scaling manufacturing facilities, and preparing for commercial passenger service. As of September 30, 2025, Joby held $978.1 million in cash and equivalents.
Wall Street Remains Divided
The sharp selloff underscores just how split investors are on Joby's prospects. JPMorgan Chase has flagged the stock as a top short idea, arguing that shares trade at a steep premium despite the long road ahead to certification, commercial launch, and eventually profitability.
On the flip side, Cathie Wood has been steadily adding Joby shares through ARK Invest, positioning the company as a long-term play on urban air mobility. It's the classic early-stage company dynamic: believers see transformative potential, skeptics see a cash burn story with an uncertain timeline.
JOBY Price Action: Joby Aviation shares were down 9.72% at $12.07 during premarket trading on Thursday, according to market data.
