Revolution.Aero Uplift: A turbulent month for Lilium
Lilium’s vertical lift and descent has been exemplary this month. But not in a way any eVTOL developer would hope for. March began well, as the firm announced it signed a memorandum of understanding (MOU) with fractional operator NetJets for 150 of its Lilium Jets worth around $1.2bn. Then, its stock price fell 33.88% overnight on Monday (March 14th) as the company and “certain” directors were accused of potential securities fraud by a short-selling company.
This past fortnight has highlighted the high risk-reward nature of being publicly listed without a product.
Although the MOU is not a firm order, NetJets – the world’s largest business jet operator – is a great name to have. The $1.2bn price tag is significant. Daniel Wiegand, co-founder and CEO of Lilium called the partnership “a major step” and hopes to “forge a long-term strategic partnership”.
The firm anticipates entry into service for their Lilium Jet in late 2024. NetJets tells Revolution.Aero it hopes to have commercial agreements finalised by this summer.
With a potential usage option for eVTOL being business aircraft transit flights to final destination, NetJets is a perfect fit. NetJets also said it will assess the rollout of Lilium’s eVTOL network in Florida as well as other regions in the US and Europe.
Fast forward two weeks or so and at least five US law firms are investigating claims “Lilium and certain of its officers and/or directors” have engaged in “securities fraud or other unlawful business practices”.
Lilium’s stock price fell $1.25 per share, or 33.88%, to close at $2.44 per share on Monday night. It then bottomed out at $2.28 on Tuesday morning.
The investigations are a result of a report Lilium NV – The Losing Horse in the eVTOL Race published by short-seller, Iceberg Research.
Iceberg’s report alleged, among other issues, that experts have raised doubts about the viability of the Lilium Jet reaching its objective of flying up to 155 miles. Citing “its configuration of 36 ducted fans [recently reduced to 30] that devour power during takeoff and landing and leaves little power for actual flight”.
Lilium says it has access to batteries with sufficient energy density – around 320-330 Wh/kg. However, the report stated that Lilium relies on Zenlabs Energy to show such batteries are within reach. Zenlabs is a 34.8% Lilium-owned associated company.
The report also estimated that Lilium has about 18 months before its cash runs dry.
This is not the first time that a short seller has targeted a company. It will be interesting to see how Lilium’s share price moves in the next few weeks (up to $2.94 the level it achieved 16:00 Wednesday). But it’s another example of how challenging being a listed pioneer can be.
It is also important to remember we can choose to believe a relatively unknown short seller or NetJets, the most prolific business aircraft buyer in the industry, and Azul, a multi-billion dollar airline.