What happened
Shares of German "flying taxi" company Lilium (LILM 4.28%) took wing Tuesday morning, flying 5.9% higher as of 11:35 a.m. ET after the company announced that:
- Chinese helicopter transportation company Heli-Eastern (aka Shenzhen Eastern General Aviation) had agreed to purchase 100 all-electric vertical take-off and landing (eVTOL) Lilium jets for use in the Guangdong/Hong Kong/Macao Greater Bay Area in China; and also that
- The Bao'an District of Shenzhen will partner with Lilium to provide eVTOL services (air taxis) in the Greater Bay Area.
So what
The Heli-Eastern deal envisions helping Lilium identify potential sites and additional partners for setting up "vertiports" for launching and landing air taxis, as well as establishing other ground infrastructure -- opening up the potential for revenue streams beyond the initial sale of aircraft. Bao'an will apparently be one of the first such partners.
The Bao'an deal also envisions Lilium setting up a regional headquarters in the district to facilitate further sales and the provision of supplies and services to support air taxi fleets.
Now what
However, neither of the two press releases Lilium issued Tuesday stated the value of the contracts to which they pertain. As such, it's hard to say whether the investors bidding up Lilium's stock price are overreacting (or perhaps underreacting) to the news.
On the one hand, Heli-Eastern's order for 100 jets lifts Lilium's total order pipeline to 745 units -- a 15.5% increase -- such that a 5.9% increase in stock price might be an underreaction. On the other hand, Lilium still hasn't delivered any jets, has lost $270 million over the past year (about half the company's total market cap), and has reported zilch in terms of actual revenues from its business.
Positive as Tuesday's announcement looks from a PR perspective, I'd tread with caution on this one -- at least until we get some actual revenues (or even better, profits) upon which to base a valuation for this stock.
