Consider a high-risk, high-reward investment in UK-based electric aircraft maker Vertical Aerospace (EVTL). The company appears significantly undervalued compared to its US competitors like Joby (JOBY), despite having a $6 billion pre-order book and a clearer path to certification. A powerful secondary catalyst is the surge in European defense spending, as EVTL is the only major European player positioned to win lucrative military logistics contracts. This is a speculative investment that could go to zero, as its success depends on raising capital until production begins. Monitor the company's progress towards its key 2028 certification target, which would unlock the global market.

Vertical Aerospace (EVTL)

• Business: Vertical Aerospace is a UK-based company developing electric vertical takeoff and landing (eVTOL) aircraft. These are described as safer, quieter, and zero-emission alternatives to helicopters.
• Technology: Their design uses a wing, which makes the aircraft highly efficient and allows it to operate with current battery technology, unlike some competitors who require future battery advancements.
• Market & Use Cases: The company is targeting a future of "highways in the sky" for mass transport.
  • Initial use cases include connecting airports to city centers (e.g., Heathrow to Manhattan in 7 minutes), emergency services, and logistics.
  • The CEO cites a Morgan Stanley report projecting the eVTOL market to be worth $1 trillion by 2040 and $9 trillion by 2050.
• Order Book: The company has over $6 billion worth of pre-orders from major airlines and operators, including American Airlines, Bristow, AirAsia, and Japan Airlines.
• Cost Structure: They have modeled a cost of $2 per seat per kilometer, which is comparable to an Uber Black or a London black cab, suggesting a path to mass-market adoption.
• Scott Galloway's Investment: Podcast host Scott Galloway is a significant investor.
  • He has invested a total of $4.5 million into the company.
  • He believes the company is significantly undervalued compared to its US peers, calling the potential return "asymmetric to the upside."
• Valuation: Vertical Aerospace is valued at around $600 million with $150 million in cash. This is a fraction of its competitor Joby, which is valued at over $12 billion. The hosts attribute this gap to Vertical being UK-based and having less cash on its balance sheet.
• Military & Defense Angle:
  • Vertical has developed a hybrid powertrain that extends the aircraft's range from 100 miles to 1,000 miles and increases its payload.
  • This opens up a significant opportunity in military logistics, a market that is expanding rapidly.
  • With European defense spending projected to grow from $300 million to nearly $1 trillion, Vertical is uniquely positioned as the only major European player in the eVTOL space.
• Risks:
  • Scott Galloway explicitly states this is a high-risk investment that "could be a zero."
  • The primary risk is capital. The aviation industry is notoriously capital-intensive, and the company will need to continue raising money to reach certification and production.
  • The success of the company hinges on its ability to secure funding until it can start generating revenue.

Takeaways

• High-Risk, High-Reward: This is a speculative investment with the potential for 3x, 5x, or 10x returns, but also a real possibility of going to zero. It is not for the faint of heart.
• Valuation Play: The core investment thesis is that EVTL is deeply undervalued compared to its US peers (Joby and Archer) despite having similar technological progress and a clearer path to certification.
• Geopolitical Catalyst: The surge in European defense spending provides a powerful, secondary market for Vertical's technology, which could accelerate growth and de-risk the commercial aviation plan.
• Key Milestone to Watch: The company is targeting certification in 2028, which would unlock the global market. They expect to be cash-flow break-even by 2030. Progress toward this date is a critical indicator.

eVTOL Sector Competitors: Joby (JOBY) & Archer (ACHR)

• Market Position: Joby and Archer are the primary US-based competitors to Vertical Aerospace. The market has largely consolidated around these three main players.
• Valuation Benchmark: They serve as a key comparison point for Vertical's valuation.
  • Joby (JOBY) is valued at over $12 billion and has about $1 billion in cash on its balance sheet.
  • This valuation is roughly 20 times higher than Vertical's, despite what the hosts describe as very similar progress on their aircraft prototypes.
• "Silicon Valley Halo": The hosts suggest that being US-based has given these companies a "technology halo," helping them attract more capital and achieve higher valuations than their European counterpart.
• Certification Path: The CEO of Vertical implies that while Silicon Valley is good at moving fast, it has no experience certifying aircraft, which is a complex, regulated process. He suggests Vertical's location in Bristol, a historic aviation hub, gives them an edge in navigating the European certification process (EASA).

Takeaways

• The eVTOL sector is no longer a crowded field of startups; it has matured into an oligopoly with a few well-funded leaders.
• The massive valuation gap between the US players (JOBY, ACHR) and the UK player (EVTL) presents a potential arbitrage opportunity for investors who believe Vertical can close the funding gap and execute on its certification plan.
• Watching the relative progress and capital raises of these three companies is key to understanding the competitive dynamics of the entire sector.

Investment Theme: European Defense & Aerospace

• The Catalyst: Scott Galloway highlights that NATO and EU countries are set to increase military spending dramatically, representing an incremental $200 billion or more in annual budgets.
• "Europe First" Mentality: He believes that due to the current geopolitical climate, European nations will prioritize spending this money with European companies rather than sending it to US defense contractors.
• Vertical's Unique Position: Vertical Aerospace is the only major European eVTOL company. This positions it as a prime candidate to win contracts for military logistics, surveillance, and transport, especially with its new long-range hybrid powertrain.
• "Free Gift with Purchase": Galloway describes this military angle as a "free gift with purchase" for his investment in Vertical. The initial thesis was based on commercial travel, but the defense opportunity adds a massive, unexpected tailwind.

Takeaways

• Investors looking for exposure to the increase in European defense spending should consider companies uniquely positioned to benefit, like Vertical Aerospace.
• This theme provides a potential buffer for EVTL. Even if the commercial rollout is slower than expected, lucrative military contracts could provide revenue and support the company's valuation.
• This is a strong example of how geopolitical shifts can create powerful, long-term investment tailwinds for well-positioned companies.