Home Taxi transport Blade Air Mobility: Business Takes Off (NASDAQ: BLDE)

Blade Air Mobility: Business Takes Off (NASDAQ: BLDE)


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Air Mobility Blade (NASDAQ: BLDE) continues to make great strides towards building a platform for flying taxis. The air mobility platform saw its business rebound beyond pre-Covid levels, while the stock fell to $5 with the stock collapse of the old SPAC. My investment thesis remains very bullish on the stock as travel rebounds to pre-Covid levels and the market moves towards eVTOLs expanding helicopter market opportunities.

Asset-Light Business

In a way, Blade is building a flying taxi business, similar to Uber technology. (UBER) in the field of carpooling. The company does not purchase high-cost aircraft, burden the balance sheet with debt, or depend on any particular eVTOL manufacturer for future aircraft. Blade provides the platform to plan trips while buying plane time from operators compared to Uber using individual drivers.

Blade provides the platform and flyer connection to run the business. For Q1’22, revenue jumped 187% to $26.6 million. The numbers aren’t as comparable to prior periods as Covid shut down its Blade Airport service completely and the company made several acquisitions to expand its business.

Income table

Source: Blade Q1’22 presentation

The company has grown significantly in the medical and organ transportation sector through several acquisitions. The MediMobility Organ Transport and Jet business surged to $22.1 million in revenue in the first quarter of 2022, accounting for more than 83% of the business.

Most investors identify with Blade and the whole concept of urban mobility based on shuttling flyers around urban centers or as a service to congested airports for long-distance travel. The company has very limited current business in this short distance category.

The company ended 2019 with a turnover of $5.2 million and reported revenue for the 2019 fiscal year ending September 30 of $31.2 million. Current revenue targets allow the business to reach pre-Covid annual levels on a quarterly basis due to the purchase of the Vancouver operation and the organ transplant business to create a platform. form of extended air mobility.

Blade airport activity is already hitting new records with an annual passenger count of 25,000 in recent weeks. The short-haul business includes the airport services segment where the company sees a huge opportunity, but the business only generated $4.2 million in revenue in the first quarter of 2022.

Income table

Source: Blade Q1’22 results release

For Blade to meet the original 2025 revenue forecast of $601 million and the 2026 target of $875 million, the company will need to grow the short-haul area by more than $500 million. Most of the expected revenue growth is not coming from the MediMobility segment, showing that the real business plan hasn’t even taken shape yet. The recent addition of 14 more transplant centers will further boost the organ transport segment, but the additional business will allow the company to reduce flight costs in the short term.

Path to profits

Blade could be out of favor for an extended period. The company does not have high margins due to the asset-light business model, and the path to profit is not short.

For the quarter, flight margins were just 11%, in part due to business at Blade Airport, which is still in recovery mode. The company does not have a large OpEx base, but Blade will need to push flight margins to the target range to achieve strong EBITDA margins exceeding 35% going forward.

The OpEx base is just around $16 million and after reducing stock-based compensation, M&A expenses, and one-time legal fees, the quarterly expense base is much closer to $10 million. of dollars.

income statement

Source: Blade Q1’22 results release

Market capitalization fell to $473 million (using a fully diluted share count of 78.8 million based on 8.0 million stock options) after the stock was battered like other old SPAC transactions. Blade ended the quarter with a cash balance of approximately $270 million, having spent an additional $10 million in cash from operations in the March quarter. The stock is trading at 3x 2023 sales estimates of $160 million, while the EV/S multiple is closer to 1.5x sales targets. The market absolutely hates “P/S” stocks, but these multiples will end up being cheap assuming Blade hits growth targets above 50% over the next few years.

Naturally, the biggest risk in history is a long period of cash burn before the business turns positive. Blade is expanding in Europe, with the opening of Blade Europe in Paris adding additional costs. Additionally, significant delays in the launch of EVAs (electric vertical aircraft) would push back much of the market opportunity where quieter electric aircraft vertical take-offs are needed to unlock additional flights.

Take away

The key takeaway from investors is that Blade Air Mobility is developing a promising air mobility platform, taking short-haul air travel to the next level. The stock offers an attractive risk/reward scenario at the current price, but next year will be volatile as activity grows and recession fears loom.