While air taxi companies have always been attractive for investing in next-generation transportation, a confluence of factors now favors acquisitions by major tech firms. The first is that air taxi company stocks are trading much below their highs compared to tech stocks. Leading area taxi firms Archer Aviation (NYSE:ACHR) and Joby Aviation (NYSE:JOBY) are both down for 2024.
On the flip side, thanks to the promise of artificial intelligence, many tech giants are trading at record highs. Nvidia (NASDAQ:NVDA), as just one example, is up more than 120% this year. As a result, a tech firm swapping its stock trading at record highs for an air taxi firm near the year-low will make the deal even more appealing.
Many tech companies have expended massive amounts of capital on electric vehicles and self-driving technology. Developments from these areas and others could be utilized in various aspects of an air taxi operation. Indeed, this is the history of tech stocks. Big conglomerates gobble up little companies that become outsized, value-added acquisitions.
Alphabet (GOOG, GOOGL)
The most obvious here is when Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), then operating as Google, bought YouTube for $1.65 billion in 2006. YouTube is now a $400 billion business. Rightfully, it has been called the “best tech deal ever.” When the superior resources of a mega-cap buyer take the small-cap target to the next level, it is a thing of beauty (and great rewards) for the shareholders.
For this with an air taxi company, enter stage right Waymo the self-driving unit of Alphabet. Billions have been put into this venture. Its taxis are prowling the streets of San Francisco; and applying to offer services at the airport.
What has been generated by Waymo could help air taxis. So could Google Maps. Alphabet is a big company among tech stocks, and it could do great things for a small-cap air tax outfit, just like it did for YouTube.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) already has an impressive air fleet and ground delivery force among tech stocks. An air taxi company would further its transportation network. It would also allow Amazon to develop another consumer product service.
This would be nothing new. At one time, Amazon tried to enter the smartphone market with the Fire Phone. For a variety of reasons, it was a flop. The big difference is that for an air taxi unit, there would already be a strong foundation and no competition dominating the market as exists for smartphones.
An air taxi company could be for Amazon as YouTube has been for Alphabet. An acquisition that blossomed from what the new owner had to offer with far superior resources brought into play. As happened with YouTube, there would already be lots of business from existing operations for an Amazon air taxi entity. The additional resources would allow an air taxi company to achieve its new potential which would not happen if it stayed independent.
Apple (AAPL)
It was not that long ago that Apple (NASDAQ:AAPL) shut down its driverless car effort, “Project Titan.” Wall Street did not care. Apple stock is still trading at all-time highs and Warren Buffett is still a major shareholder.
But it would be better with an air taxi company in its portfolio. The App Store for Apple would have a whole new range of offerings. What was achieved by Project Titan could be repurposed for an operating air taxi fleet. Hopefully, this would have driverless electric vehicles cruising the skies sometime in the future.
Like all tech giants, Apple has its high-margin products that pay the bills; and fund new ventures and acquisitions. But competition could one day knock the iPhone or Mac off the throne. Thus, an air taxi fleet could provide that new high-margin line of goods and services to keep the tech world tuned in to what is new coming out from Apple.
On the date of publication, Jonathan Yates did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.