Shares of Joby Aviation fell about 8% in after-hours trading on Wednesday after the California-based eVTOL developer revealed plans to raise approximately $1 billion through concurrent public offerings.
The company said it intends to offer convertible senior notes due 2032 in one public sale and shares of its common stock in a separate offering. Combined proceeds from the two offerings are expected to total roughly $1 billion.
Joby also disclosed that Morgan Stanley will conduct a "delta offering" of borrowed Joby shares. That transaction is intended to help facilitate hedging activities by certain investors participating in the convertible note offering. In that delta offering, no new shares will be issued and Joby will not receive any proceeds.
The filings make clear that the convertible note offering and the common stock offering are being conducted independently of one another and that neither is conditioned on the completion of the other. By contrast, the company said the delta offering and the note offering are interdependent - each is contingent upon the other proceeding.
Additionally, Joby plans to provide the underwriters with an option lasting 30 days to purchase additional notes and shares of common stock.
Joby is developing electric vertical takeoff and landing aircraft designed for commercial passenger service. The company and peers in the developing electric air taxi sector are pursuing zero-emission aircraft capable of vertical takeoff and landing, and Joby said the sizable planned capital raise comes as it continues to advance toward commercial operations and regulatory certification of its aircraft.
Context and market reaction
Investors reacted to the announced financing with a notable after-hours sell-off. The structure laid out in the filings separates the equity and note sales while linking the note and delta transactions, an arrangement intended to accommodate hedging by note investors without immediately diluting existing shareholders through the delta offering itself.
What the filings state
- Convertible senior notes are proposed with a maturity in 2032.
- Common stock will be offered in a separate public offering.
- Morgan Stanley is slated to arrange a delta offering of borrowed shares for hedging - Joby will not receive proceeds from that activity and no new shares will be issued in that transaction.
- The note offering and common stock offering are not contingent on each other; the delta offering and note offering are contingent on each other.
- Underwriters will receive a 30-day option to buy additional notes and common stock.
The filings and subsequent market move underscore the company's near- to mid-term capital needs as it progresses toward commercialization and regulatory approval.