Stock analysis: Lilium Aviation - $LILM (-10,98 %)

1. general company profile:

Lilium Aviation is a German company specializing in the development of electrically powered vertical take-off and landing aircraft (eVTOL). Lilium's goal is to revolutionize urban air transport - more specifically, air transport between two cities - and to offer a sustainable, efficient transport solution. The focus is on an emission-free and cost-effective mobility platform that is intended to be an alternative to conventional means of transportation and save a considerable amount of time.

Current situation:

Lilium is currently in the development phase and the first commercial air service is targeted for 2026. The stock is traded on NASDAQ under the ticker "LILM" and is one of the companies active in the "Urban Air Mobility" (UAM) sector, an emerging market segment with potentially high growth.

2. fundamental key figures

Lilium is still in the pre-revenue phase, i.e. the company has not yet generated any significant sales. This is typical for companies in the development of innovative technologies. It is therefore important not to focus on traditional valuation ratios such as the price/earnings ratio (P/E ratio), but also on the financing situation and the progress of product development.

- Market capitalization~600 million USD (as of September 2024)

- Turnover: Currently no significant turnover as the company is still in the development phase

- Cash burn rateLilium is currently burning large sums of money to advance the development and certification of its aircraft. According to the last quarterly report, the company still had enough capital for about 12-18 months, which means a constant risk in terms of future capital increases.

- DebtLilium has taken on moderate debt to finance its research and development activities. The debt to equity ratio is relatively high given the business model and the capital intensive nature of the sector. A fundamental valuation based on key figures such as the P/E ratio or P/E ratio is currently not possible as the company is not yet generating profits. It is more important to analyze liquidity, progress in development and market potential.

3. market situation

The market for electrically powered air cabs (eVTOLs) is still in its infancy and is expected to grow strongly. Global urbanization, increasing traffic volumes and the drive towards sustainable mobility solutions create an attractive basis for companies such as Lilium. Macroeconomic factors: However, economic uncertainty and rising interest rates could make it more difficult for Lilium to raise capital. At the same time, high regulatory hurdles and slow adoption of nationwide regulations for eVTOL transportation could push back the timeline for commercialization. Technical analysis:

- Price development:

Lilium's stock has experienced a significant downtrend since its IPO (via SPAC) as the initial hype over the eVTOL sector has leveled off. This reflects the market's general distrust of speculative technology companies that have yet to show revenues or profits.

- Chart patternChart pattern : There are currently no stable technical support levels visible, suggesting that the price could remain volatile. The stock is below its moving averages (50-day and 200-day), indicating continued weakness.

- Relative Strength Index (RSI): The RSI indicates an oversold situation, which could allow for a technical recovery in the short term, but without structural improvement in fundamentals.

4. risk/reward ratio

• Opportunities:

- Technological leadershipLilium has positioned itself as one of the leading companies in eVTOL technology and could gain a significant competitive advantage if commercialization is successful.

- Market potentialThe market for Urban Air Mobility is estimated to have a potential of several billion dollars and Lilium could become a major player in this field, especially in Europe and North America.

- Sustainability trendThe global trend towards zero-emission mobility is a strong driver for the long-term demand for such solutions.

• Risks:

- Raising capital: Lilium will require significant funding in the coming years to complete development and commercialize the aircraft. Any delay could complicate financing and lead to dilutive effects.

- Regulatory hurdles: Certification and approval of eVTOLs could be complex and time consuming, which could push back the market entry date.

- Competition: There are numerous competitors in the eVTOL sector, including Archer Aviation, Joby Aviation and Vertical Aerospace, which are also making significant progress. It is unclear which company will ultimately become the market leader.

5. profitability calculation:

In order to make a profitability calculation for Lilium Aviation in the years 2028 to 2040, we need to make some assumptions and calculations. This calculation takes into account the increase in production, the prices of the jets and the expected running costs.

Assumptions

1. production targets:

• Year 2028: 100 jets
• From 2029, production will be increased by 20-30 % annually.

2. sales prices:

• Premium jet: € 10,000,000
• Standard jet: € 7,000,000
• More standard jets tend to be sold.

3. running costs (here I have oriented myself to the industry)

• Assumption: The running costs (production, operation, administration, etc.) amount to 60% of revenue.

4. ratio of sales:

• Based on current letters of intent and the market, it is assumed that 30% premium jets and 70% standard jets will be sold in the first few years.

5. production and sales forecast:

• Here are the annual production figures taking into account an annual increase of 20-30%. I will use a moderate increase of 25% for the calculation.

Profitability calculation:

• Year Jets Turnover Cost. Profit
• 2028 100 790mio. 474million 316million

• 2030 1561,233million 740million 493million

• 2035 4763,761million 2,256million 1,504million

• 2040 1453 11,479million 6,887million4,591million

- Lilium Aviation shows significant potential for revenue growth, assuming production targets are met and the market for eVTOLs remains stable.

- The calculation suggests that Lilium may be able to operate with positive net results from 2028 onwards, with profitability increasing significantly over time.

- However, investors should keep an eye on the risks related to capital raising and market development.

Conclusion

Lilium Aviation is an innovative company in a fast-growing sector, but also one with significant risks. The lack of short-term revenues, the high capital commitment and the uncertainties regarding commercialization make the share a speculative investment. Recommendation: For risk-tolerant investors who believe in the long-term future of Urban Air Mobility, Lilium could be an exciting option with high upside potential.

However, the position should be kept small due to the high level of uncertainty. The share is probably not suitable for more conservative investors who value stable business models and reliable income.

However, I personally see more opportunities than risks here, which is why the share is a "BUY" for me.