Shares of electric-aircraft makers soared Monday following an enigmatic tweet from Tesla. Some investors are swinging for the fences with a bet that the stocks could benefit from an announcement the electric-vehicle company has scheduled for Tuesday.
Shares of Joby and Archer Aviation, which make electric vertical takeoff and landing (eVTOL) aircraft, rose 7.2% to $19.57 and 17.9% to $13.64, respectively, in Monday trading. The S&P 500 added 0.4% and the Dow Jones Industrial Average fell 0.1%.
The logic behind the gains is that a tweet from Tesla promising a significant announcement on Tuesday contained a video showing a spinning wheel with a Tesla logo. It could represent the rotor of a Tesla plane, or quadcopter drone, which might point to positive news for the eVTOL industry.
It is a thin connection. Buying a stock based on an eight-second video embedded in a tweet might not be the best idea.
Joby declined to comment. Archer didn’t immediately respond to a request for comment.
The consensus view is that Tesla will offer news about a lower-priced vehicle, which should reach the market in the coming months. The new model could help Tesla arrest a recent decline in sales and provide car buyers with some relief after the expiration of the $7,500 federal EV purchase tax credit at the end of September.
The odds are that new-car news will make up the bulk of Tuesday’s announcement. Musk has spoken about aviation in the past, even mentioning America’s need to build more drones, but said nothing that indicated a product or partnership was imminent.
Investors won’t have to wait long to see if the hype amounts to anything.
Investors in Joby and Archer should brace for continued turbulent trading. Neither company has generated significant sales, and both are waiting for regulatory approvals to launch commercial service. Wall Street doesn’t expect either company to achieve billions of dollars in sales until late in the decade.
The stocks, which tend to move on product updates, trade wildly. Joby stock has ranged from $4.80 to $20.95 over the past 12 months, while Archer has ranged from $2.85 to $13.92.