Joby Deal Gives Blade New Direction, But Stock Lacks Lift
It’s been quite the week for Blade Air Mobility Inc. (NASDAQ: BLDE). On August 4, Blade and Joby Aviation Inc. (NYSE: JOBY) announced the sale of Blade’s passenger mobility business to Joby for up to $125 million. That sent BLDE stock soaring 30%. Blade will become a pure-play medical logistics company and change its name to Strata Critical Medical.
However, the stock has given up most of those gains after the company delivered a mixed earnings report. Although it beat on the top line, it delivered negative earnings per share of five cents, which was a penny worse than the negative four cents analysts were expecting.
The earnings report is a reminder that Blade has tremendous potential and serves a critical niche among business services stocks. However, the company is not yet profitable, and it may take some time for it to realize the economic benefits from the Joby deal.
The Passenger Division Sale May Be Addition by Subtraction
Blade Air Mobility operates as two divisions: Medical and Blade Passenger. The medical division is primarily comprised of its MediMobility Organ Transport business. The company is the largest dedicated air transporter of human organs for transplant in the United States.
As of this quarter’s earnings, nearly 60% of the company’s revenue and 84% of its EBITDA (earnings before interest, taxes, depreciation, and amortization) came from its medical division. In the quarter, Blade posted 18% year-over-year (YOY) revenue growth from the medical division. This contrasts with the combined 8% YOY revenue decline in its short-distance and Jets business in the passenger division.
Blade Anticipates a Leaner, Profitable Business
The company’s earnings report was heavily focused on the impact of the Joby deal on Blade’s business. Management was bullish on the outlook, citing an expectation for “continued attractive organic growth over the coming years.” The company also said it plans to pursue strategic acquisitions with the expected $200 million of cash on hand, pro forma for selling its passenger business.
In short, investors can expect a leaner company with more predictable cash flows, focused on non-emergency medical transport (NEMT), organ transfer, and time-critical healthcare logistics.
As the company’s quarterly results bear out, this is a less volatile space compared to urban air travel.
The Risk Is in the Details
The sale of Blade’s passenger business to Joby is for “up to” $125 million. That’s because the sale will be paid entirely in Joby stock. On the company’s earnings call, Blade’s management didn’t express concern over Joby’s ability to deliver.
That said, a deal based on a stock-based structure opens the possibility that Joby’s share price could impact Blade's final payout.
This risk is somewhat amplified because Blade's chief executive officer (CEO), Rob Wiesenthal, remarked that the deal will close in the first half of 2026.
That’s not an unusual timeline for a deal involving regulatory approvals. However, it does extend the runway for stock price volatility, particularly for a pre-revenue aviation startup like Joby.
BLDE Stock May Need Time to Take Off
What Blade might be (i.e., a profitable, asset-light medical mobility company) is enticing. The company estimates the organ logistics market to be an addressable market worth about $1 billion, of which Blade already controls about 30%.
But that’s not where the company is today. It’s also not what attracted some initial investors to the company. Those investors were attracted to the opportunity in air mobility. While the resulting company may offer stability and near-term profits, the upside will likely be capped.
Until its passenger business is sold, investors should expect BLDE stock to reflect cautious optimism at best. However, it's likely to be choppy as traders look for opportunities for short-term gains.
Investors with a lower risk tolerance may want to wait until the deal is closer to completion before deciding on BLDE stock. However, risk-tolerant investors may want to start building a position and scale in as the final details of the deal emerge.
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