Air taxi start-up Lilium (NASDAQ: LILM) has reportedly secured a firm order from a state-owned Saudi Arabian airline. Investors appreciate the vote of confidence, sending Lilium shares up about 10% as of 11:30 a.m. ET.
Support, and potentially cash?
Lilium is one of several start-ups working to develop and commercialize so-called “eVTOL” airframes, shorthand for electric vertical takeoff and landing planes. The aircraft are designed to take off and land like a helicopter, ferrying a handful of people over city traffic or from an outer suburb to a metropolitan airport.
On Thursday, Reuters reported that airline Saudia is closing in on a major order for Lilium planes. The agreement would build on a framework between the two companies signed 18 months ago, with Lilium reportedly eager to convert that framework into a firm order.
Lilium declined to comment but sent out invitations for an event at its headquarters in Germany scheduled for July 18.
Lilium has about 780 orders for its jet, including the Saudia interest, but the report says it needs to solidify those deals and secure advanced payments to fund continued development of its plane.
Is Lilium stock a buy?
A firm order from Saudia would be a step in the right direction for Lilium, but investors need to be aware the company still has a long journey up ahead of it.
These new designs require extensive testing and regulatory approval before beginning commercial use, and at least two rivals — Joby Aviation and Archer Aviation — appear to be ahead of the pack in terms of winning approvals.
That said, if eVTOLs deliver on their promise there is room here for multiple winners. Investors should be encouraged by the development, but limit Lilium to a small, risky sliver of a well-diversified portfolio.
Should you invest $1,000 in Lilium right now?
Before you buy stock in Lilium, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lilium wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,672!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 8, 2024
Lou Whiteman has positions in Joby Aviation. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Lilium Stock Is Soaring Higher Today was originally published by The Motley Fool
Source Agencies
