Is it Worth Investing in Archer Aviation Shares When They Are Under $10.50?
In the rapidly evolving world of electric vertical takeoff and landing (eVTOL) aircraft, Archer Aviation is making significant strides. The company, which specializes in air taxi services, is poised to capitalize on the growing demand for sustainable urban air mobility (UAM) solutions.
Archer's flagship aircraft, the Midnight, priced at around $5 million each, has secured a solid $6 billion order book, indicating strong customer interest. The company plans to begin commercial operations with piloted aircraft in the UAE in 2025, using this market as a base for international expansion.
Production capacity is growing rapidly, supported by a new 400,000 square-foot manufacturing facility in Georgia, designed to meet current and future orders. Archer recently strengthened its liquidity by raising approximately $850 million through selling shares at $10 each, boosting its cash position to about $2 billion.
Analysts generally have a positive outlook on Archer stock, with an average rating of "Strong Buy" and a 12-month price target around $13.13, implying a roughly 29% upside from recent prices. However, it's important to note that Archer is still a cash-burning startup with negative earnings and net losses over $500 million. The stock is highly volatile, with a beta around 3.1, indicating sensitivity to overall market swings and higher risk.
While the company’s commercial roll-out plans are advanced, regulatory approvals and market adoption risks remain significant. Archer is collaborating with U.S. regulators and a five-country alliance, including the United States, the United Kingdom, Australia, Canada, and New Zealand, to streamline the rollout of eVTOLs globally. The General Civil Aviation Authority (GCAA) of the UAE has collaborated with Archer to create a certification plan for the Midnight aircraft.
Archer has also formed partnerships with major airlines, including United Airlines and Southwest Airlines, and aims to introduce air taxi services in major U.S. cities, such as New York, Los Angeles, San Francisco, and Miami, as well as in Abu Dhabi, United Arab Emirates. The company is also designated as the official air taxi provider for the 2028 Olympic Games in Los Angeles.
For aggressive investors with a long-term perspective, Archer Aviation's stock may be an attractive investment in 2022. However, it remains a speculative play dependent on successful commercialization of air taxi services and scaling production effectively. Investors should be prepared for potential setbacks typical of early-stage aerospace ventures and should consider Archer stock as part of a diversified portfolio.
- Archer Aviation, after raising approximately $850 million through selling shares at $10 each, now has about $2 billion in cash, an indication of their ongoing efforts to secure funds for their innovative electric vertical takeoff and landing (eVTOL) aircraft projects.
- For investors with a focus on real-estate and stock-market sectors looking for long-term prospects, Archer Aviation's stock may be an attractive investment in 2022, given their strategic partnerships with major airlines and plans to introduce air taxi services in major cities.
- As Archer Aviation plans to begin commercial operations with piloted aircraft in the UAE in 2025, aggressive investors should be mindful of the risks associated with this cash-burning startup, including regulatory approvals, market adoption, and the scalability of eVTOL technology, and consider diversifying their portfolios accordingly.
