Joby nosedives as US$1.2bn raise hits turbulence
Joby Aviation is in free fall after raising an upsized US$1.2bn through a combined equity and convertible bond offering, despite its use of an equity derivative to blunt the share-price impact of the CB financing.
The electric aircraft maker collapsed 16.4% to US$11.18 in midday trading Thursday after the pricing of a US$600m stock sale alongside an equally sized US$600m six-year CB – the combo offering publicly launched at a US$1bn target overnight Wednesday after a two-day wall-cross.
Morgan Stanley, serving as lead-left bookrunner on both tranches, priced 52.9m shares at US$11.35, the bottom of the US$11.35–$11.75 marketing range and a 15.1% discount to the US$13.37 last sale price Wednesday. The bank placed the CB at a 0.75% coupon and a 25% conversion premium to the reference equity price, toward the investor-friendly ends of 0.5%–1% and 25%–30% price talk.
It was a delicate balancing act – especially given the overnight execution.
A critical component of the CB financing was Morgan Stanley’s facilitation of a delta, in which the bank sourced 5.3m shares from existing investors and offered that position on swap to arbs participating in the deal.
“Delta placements are designed to enable convert arb investors to focus on the economics of a deal,” explained one CB banker. “Hedge funds don’t have to worry about where they are going to source borrow.”
Ordinarily, CB arbs short stock in the open market to hedge exposure, pressuring the stock price. In theory, the delta placement should have contained that pressure.
Pilot program
In reality, the share-price plunge suggests long-only equity investors lack confidence in Joby (or were surprised by its need to sell stock so soon).
Joby is returning to market after having just raised US$575.7 in October last year via an overnight block sale at US$16.85, a 10.9% discount to its share price at the time – Morgan Stanley was able to increase its commitment from US$300m and subsequently exercised its greenshoe option.
Joby is adding to the US$1.4bn of cash it held as of December 31, based on preliminary unaudited results provided at launch.
The new funding comes at an important time for Joby and other electric aircraft manufacturers.
In September 2025, the FAA launched a program to allow early adoption of electric aircraft before full certification is achieved. Created by executive order, the eIPP program allows aircraft makers to begin operations roughly three months after public-private partnerships are announced.
Short for electric vertical takeoff and landing and advanced air mobility integration pilot program, eIPP is designed to accelerate adoption of air taxis and fixed-wing planes by US states for a diverse set of needs, such as cargo deliveries and emergency response. States were obligated to submit proposals by December 11, 2025, with announcements of public-private partnerships expected in March and implementation to begin in June.
In addition to Joby, other electric aircraft makers vying for partnerships include Archer Aviation, Beta Technologies, privately held Electra, Eve Mobility, Vertical Aerospace and Boeing’s Wisk Aero unit.