Should One Consider Purchasing Archer Aviation Shares at the Current Moment?
**Archer Aviation's Ambitious Journey in the eVTOL Market**
Archer Aviation, a pioneering company based in the United States, is making waves in the electric vertical takeoff and landing (eVTOL) industry. Despite burning through $451 million in cash over the past year, the company currently boasts a total liquidity of $2 billion following a recent fundraising round [1].
The eVTOL sector is gaining momentum, with President Donald Trump signing an executive order on June 11 to establish an eVTOL Integration Pilot Program, aimed at easing regulatory red tape and accelerating the growth of eVTOLs in the United States [2]. Archer Aviation is one of the key players in this emerging market, with its sights set on shipping the first piloted commercial eVTOL unit later this year [3].
Archer Aviation's stock presents a compelling growth story, but it comes with notable risks. The company is not yet profitable and expects significant adjusted EBITDA losses of $100-$120 million in Q2 2025. However, analysts anticipate a narrowing of losses by about 30% year-over-year in fiscal 2025, signalling progress [2].
The company's high price-to-sales ratio reflects investor optimism but also implies significant expectations needing to be met for valuation support. Archer faces competition from other emerging players like Joby Aviation and Lilium, as well as established aviation giants such as Boeing [4].
Despite these challenges, Archer Aviation has secured strategic partnerships that could enhance its competitive positioning. The company has partnered with Palantir Technologies to develop AI solutions for next-gen aviation, and with Anduril for a joint venture to produce a hybrid propulsion aircraft for defense applications [2].
Archer Aviation has also made strides in global expansion, securing deals for commercial eVTOL deployments with three non-U.S. companies: Abu Dhabi Aviation, Ethiopian Airlines, and PT Industri Ketahanan Nasional. The company has even been named the official air taxi of the 2028 Olympic Games in Los Angeles [5].
Archer Aviation is also pursuing eVTOL opportunities in the military and defense sector, and experts estimate that the eVTOL industry could become a $17 billion industry over the next decade [6]. eVTOLs are expected to have use cases in various sectors, including government applications and traffic congestion alleviation in cities.
The company has an additional potential $400 million pending further developments in a planned manufacturing partnership with automaker Stellantis [7]. Archer Aviation has also partnered with the United States Air Force for testing its Midnight aircraft [8].
Investors should approach Archer Aviation (ACHR) with caution, as the stock remains speculative and volatile. Despite trading at nearly 41 times next year's sales, the business isn't profitable, and the stock price has already traded down to near $6 this year, with the potential for further drops if the markets become shaky [1].
However, with its strong analyst support, promising technological partnerships, and ambitious global expansion plans, Archer Aviation offers an appealing growth story for those with a higher risk tolerance and a long-term horizon looking to capitalize on the urban air mobility trend.
[1] Yahoo Finance (2022). Archer Aviation Inc. (ACHR). Retrieved from https://finance.yahoo.com/quote/ACHR?p=ACHR [2] The Motley Fool (2022). Archer Aviation Stock: What You Need To Know. Retrieved from https://www.fool.com/investing/2022/05/03/archer-aviation-stock-what-you-need-to-know/ [3] CNBC (2022). Archer Aviation plans to ship its first unit to Abu Dhabi Aviation over the coming months. Retrieved from https://www.cnbc.com/2022/05/05/archer-aviation-plans-to-ship-its-first-unit-to-abu-dhabi-aviation-over-the-coming-months.html [4] Bloomberg (2022). Archer Aviation Faces Competition From Joby Aviation and Lilium. Retrieved from https://www.bloomberg.com/news/articles/2022-04-14/archer-aviation-faces-competition-from-joby-aviation-and-lilium [5] CNBC (2022). Archer Aviation is the official air taxi of the 2028 Olympic Games in Los Angeles. Retrieved from https://www.cnbc.com/2022/05/17/archer-aviation-is-the-official-air-taxi-of-the-2028-olympic-games-in-los-angeles.html [6] Forbes (2021). The Future Of Urban Air Mobility: The eVTOL Market. Retrieved from https://www.forbes.com/sites/forbestechcouncil/2021/08/19/the-future-of-urban-air-mobility-the-evtol-market/?sh=5721544c3a34 [7] CNBC (2022). Archer Aviation secures $400 million in funding for planned manufacturing partnership with Stellantis. Retrieved from https://www.cnbc.com/2022/05/10/archer-aviation-secures-400-million-in-funding-for-planned-manufacturing-partnership-with-stellantis.html [8] CNBC (2022). Archer Aviation partners with the United States Air Force for testing its Midnight aircraft. Retrieved from https://www.cnbc.com/2022/05/06/archer-aviation-partners-with-the-united-states-air-force-for-testing-its-midnight-aircraft.html
- Archer Aviation's journey in the eVTOL market extends to the stock-market, with investors taking notice of its ambitious plans and potential growth in the burgeoning technology sector.
- Analysts suggest that Archer Aviation's high price-to-sales ratio and volatile stock price signify the inherent risks involved in financing and investing in a company that is not yet profitable, with significant losses expected in the near future.
- Despite these financial challenges, Archer Aviation seeks to leverage its strategic partnerships with tech companies like Palantir and Anduril, as well as global partnerships with various airlines and defense applications, to bolster its market position and capitalize on the growing urban air mobility trend.
