Surf Air Mobility Stock: The Upside Case

Surf Air Mobility stock (NYSE: SRFM) has definitely taken a beating recently, plummeting from around $8.80 in mid-July all the way down to $2.63 now, basically wiping out most of the gains it saw earlier this summer. The main reason behind this drop seems to be a combination of things. For starters, they’re still facing significant net losses—$27.2 million in Q3 2025 and $28.0 million in Q2 2025.

On top of that, there’s a real worry about the risk of further shareholder dilution, especially after the $27 million direct equity offering back in July and a big $100 million strategic transaction that also included issuing new equity. Ultimately, this stock volatility and the underlying financial weakness have really cooled off investor enthusiasm following that initial price surge.

However, it’s not all bad news! Despite these headaches, some investors are still feeling quite optimistic about the company’s long-term future, especially regarding their electrification and software platform initiatives. In fact, their Q3 earnings report offered a few bright spots, like actually exceeding their revenue guidance and hitting a second consecutive quarter of profitability in their airline operations when looking at adjusted EBITDA.

So, what’s the bull case premise?

Simple: Surf Air isn’t just an airline—it’s becoming the software infrastructure play for an entirely new aviation category. If SurfOS becomes the operating system for advanced air mobility the way Palantir became essential for defense and intelligence, we’re talking about a fundamentally different business model with software-grade margins.

That being said, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell 2000, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Image by 필대리 from Pixabay

Surf Air’s Upside Potential

Surf Air is really setting itself up for a long-term transformation right now. While most of the company’s revenue today comes from its standard operations—things like regional scheduled flights, charter operations, and cargo services—the big potential for the stock really lies in the company’s plans to electrify short-haul regional air travel. They’re aiming to do this by using hybrid and fully electric propulsion systems on their existing fleet.

On the software side, Surf Air has significantly deepened its ties with Palantir, the artificial intelligence software giant. Palantir recently boosted its stake in a funding round and now actually owns nearly 20% of the company. This close relationship extends to their business operations, too: they have a five-year exclusive software partnership, and Surf Air’s own SurfOS platform is powered by Palantir’s AI. SurfOS is being developed to become the next-generation operating system for the entire aviation industry.

Why would that justify 10x upside?

Look at the market dynamics: every new eVTOL (electric vertical takeoff and landing) manufacturer, every regional airline adopting electric aircraft, every urban air mobility operator—they all need software to manage operations, optimize routes, handle scheduling, and integrate with existing air traffic systems. That’s where SurfOS sits. Also see – Why Archer Aviation Is Positioned To Become The Uber of Air Travel

But isn’t this just another struggling airline trying to pivot to software? Fair skepticism. Here’s why this might be different: the Palantir integration. Palantir’s involvement isn’t cosmetic—their AI and data integration capabilities are genuinely world-class. If SurfOS is genuinely “powered by Palantir,” you’re talking about bringing enterprise-grade AI into aviation operations. More importantly, the strategic transaction announced recently specifically focuses on “accelerating development and commercialization” of SurfOS. That signals management recognizing where the real value is and doubling down on the software play rather than just running flights.

What does the path to 10x actually look like?

You need SurfOS to become genuinely essential infrastructure. Here’s the playbook:

• Phase 1 (1-2 years): Prove the platform works on Surf Air’s own network, showing operational efficiency gains, cost reductions, and safety improvements.
• Phase 2 (2-4 years): Sign 3-5 major partnerships with eVTOL manufacturers or regional carriers. The goal is to become the default software solution as new aircraft enter service. Early mover advantage matters enormously here.
• Phase 3 (4-6 years): Scale to dozens of operators as the advanced air mobility market accelerates. Software revenue eclipses airline operations revenue. Margins expand dramatically.

What would the financials need to look like?

Let’s reverse-engineer this. For a 10x to make sense, you’d need the market to believe Surf Air could generate something like:

• $150M+ in annual software revenue by 2030
• 70-80% gross margins on software (typical for B2B SaaS)
• Recurring revenue model with high customer lifetime value

That would support a valuation in the $1.2-1.5B range using software multiples (8-10x revenue for growth infrastructure software). If they’re currently valued around $150M, there’s your 10x.

Is $150M in software revenue realistic?

Surf Air’s revenue over the last twelve months was just $107 million. But here’s where it gets interesting: if SurfOS captures 10% of the software/platform layer in the advanced air mobility market, we could see $150–$250 million in recurring revenue. The market is certainly large enough to support those numbers.

What are the critical risk factors?

• Competition: What if Airbus, Boeing, or even existing aviation software players build competing platforms? They have deeper pockets and more industry relationships.
• Technology risk: “AI-enabled” and “powered by Palantir” are buzzwords until proven otherwise. Does the software actually deliver measurable value? Also, check out our take on – Palantir Stock Downside Case: $85?
• Timing: The advanced air mobility market could develop more slowly than projected. Regulatory hurdles, infrastructure buildout, and public acceptance—all could delay the timeline.
• Capital requirements: Software development and market penetration require significant investment. Does Surf Air have the runway to get to profitability before needing dilutive financing?

See, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

Bottom Line

The market opportunity is real, the timing could be right, and the software-as-infrastructure angle is strategically sound.
Probable? Much harder to say. You’re betting on exceptional execution in both software development and go-to-market strategy, in an emerging industry with no established playbook. The Palantir connection is intriguing but not a guarantee.

The 10x scenario exists if Surf Air successfully pivots from being an airline that has software to being a software company that understands aviation. That’s a difficult transition, but the recent strategic transaction suggests management sees the same opportunity. For investors with high risk tolerance, this is the type of asymmetric bet where you could lose 70% or more or make 10x.

Invest with Trefis Market-Beating Portfolios

See all Trefis Price Estimates