Blade Air Mobility: A Long-Term View, Reiterate Buy (NASDAQ:BLDE)

Rating maintained

We initiated blanket of Blade Air Mobility, Inc. (NASDAQ:BLDE) on August 24, 2022 with a “BUY” rating. Performance since then has been lackluster, with the stock losing 20% ​​of its market capitalization while the index only lost about 1%. this time frame. Despite this short-term underperformance, we remain bullish on BLDE shares over the longer term, as Q3 2022 earnings showed continued financial growth and valuation has the ability to rise over the longer term.

Company Summary

BLADE is an “Urban Air Mobility” company that offers transportation services between different cities in the United States. Most notably, BLADE offers 5-minute helicopter rides between Manhattan and JFK Airport for about $200 or so and also offers other shuttle services. BLADE also offers other services such as MediMobility organ transport and jet charter services. Each line of business, as evidenced by the robust quarter-over-quarter growth of Last year.

Q3 2022 financial performance

Improve metrics

As a high-growth, high-potential company in urban air mobility, we are pleased with the performance in the third quarter. The company’s TTM revenue increased from $107.2 million in the second quarter of 2022 to $132.6 million in the third quarter of 2022. On a year-over-year basis, the company’s total revenue increased 125%, largely due to its acquisition last year, with pro forma organic revenue. 60% growth. Early numbers are strong and the company is now trading at a 2.5x TTM earnings multiple, well below the roughly 3x multiple quoted in our initial coverage. In sum, the company has shown strong financial growth and the valuation has become cheaper.

Well capitalized

Despite the unprofitability, the company’s balance sheet remains strong, with a cash balance of $202 million, or about 66% of the company’s market capitalization. We believe this cash balance gives us a good lead as the company continues to grow its operations and find new opportunities. The margin on flights also increased quarter over quarter, from 14.3% to 20.3%. Improving profitability measurement in a key business area gives us additional confidence that the company is able to improve profitability and reduce cash burn. Recent acquisitions appear to have been good additions and generate cash flow that can help the company maintain and grow its operations.

Other growth opportunities

We also believe the company has positioned itself to be the leading provider of urban air mobility across the globe. Although in its infancy, the company has a presence on three continents, with a presence in the United States, Canada, Europe and India. For a company with a market capitalization of $300 million and relatively new, international opportunities are exciting despite the regulatory challenges that stand in their way. We believe that with widespread adoption of urban air mobility platforms, Blade will get off to a good start in international markets due to its current brand and presence.

Conclusion

The results for the third quarter of 2022 do not add much to our opinion and we therefore reiterate our “BUY” rating. The company’s revenue growth remains strong and its fundamentals are solid. We still view this business as a good asymmetric risk/reward opportunity and rely on executing a long-term strategy that could transform the transportation landscape. While major regulatory and adoption risks remain, we believe that at this current valuation, the upside is substantial if the company continues to grow its footprint and focus on profitability as part of its long-term strategy. .