Why Joby Aviation Stock Sank This Week

Joby Aviation (NYSE: JOBY) stock lost ground across the last week of trading. The electric flying vehicle company's share price closed out the stretch down 12% from the previous Friday's market close, according to data from S&P Global Market Intelligence.

Joby Aviation fell this past week following news that the company had entered into an agreement to sell new stock amid a broader valuation pullback for speculative stocks. But while its share price slipped, there was some good news for the company.

Joby Aviation paves the way for a substantial new stock sale

Joby Aviation submitted a filing with the Securities and Exchange Commission (SEC) on Dec. 10 showing that it planned to sell new stock. According to the filing, the company has cleared plans to sell up to $300 million worth of new shares at a time of its choosing.

If the company proceeds with the stock sale, the move will have a diluting impact on positions held by existing shareholders. Selling stock will allow Joby to raise funds, but it will mean that the company's share base is cut into a larger number of pieces. In turn, existing shares will come to account for a smaller ownership stake in the business.

In addition to concerns about dilution from a new stock sale, Joby Aviation stock also slipped in conjunction with trends impacting the broader market. While growth-dependent and otherwise speculative stocks have generally been enjoying strong momentum lately, valuation momentum in these categories took a breather this week as investors weighed potential pressures along macroeconomic and geopolitical lines.

Joby investors did get some good news this week

Despite sell-offs over the last week of trading, Joby did have some good news for shareholders. The company announced on Dec. 10 that it had entered into a partnership with Jetex to support the private jet charter's operations in the Middle East. Joby plans to create a flying vehicle network that connects Jetex passengers to various locations.

Joby announced on Friday that it had completed a series of successful test flights in South Korea's K-UAM Grand Challenge. Joby is the first flying taxi company to complete test flights through the program.

Joby Aviation now has a market capitalization of roughly $5.8 billion. While the business isn't posting sales yet and still needs to get regulatory approval for its flying electric crafts, things appear to be moving in the right direction for the company.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.