As we head onto a new dawn of transportation, Archer Aviation (ACHR) is primed for a leading position in this futuristic flying car market. The company shows promising signs with its steadfast growth and strategic partnerships with industry players such as United Airlines (UAL) and Stellantis (STLA), who recently pledged a $400 million contribution, bolstering Archer’s manufacturing capabilities. The company has recently delivered its first aircraft to the U.S. Air Force.
In fact, this delivery is part of its AFWERX Agility Prime contract, which has a value of up to $142 million. Furthermore, the company announced launching an air mobility network in Los Angeles, set to be operational by 2026, and proposes vertiports for vertical take-off and landing at significant spots such as LAX, Orange County, Santa Monica, and SoFi Stadium. Despite facing a dip in share price, Archer continues to make positive advances, making it an exciting potential investment opportunity in the nascent flying car industry.
Archer Aviation Gaining Momentum
Archer Aviation is a company that designs, develops, and operates electric vertical takeoff and landing (eVTOL) aircraft. The company’s flagship model, the Midnight aircraft, aims to provide an air taxi service for small groups, boasting a maximum speed of 150 mph and up to 100 miles range. Archer’s aircraft have advantages over helicopters as they are cheaper, greener, quieter, faster, and more fuel-efficient, making them better suited for landing in densely populated areas. The company has aggressive ramp-up plans to increase production from 10 aircraft in 2025 to 650 by 2028.
Archer is achieving its ambitious goals ahead of schedule. It has completed 402 test flights this year, eclipsing its goal of 400 test flights for 2024. The U.S. Department of Defense has accepted the military assessment of Archer’s Midnight aircraft, and the U.S. Air Force is evaluating it as part of a contract with Archer.
To fuel these achievements, Archer has recently closed a PIPE investment, bringing its total funding to over $1.5B. Additionally, Archer has secured an additional $400 million in capital from Stellantis, which will help cover labor costs for projected manufacturing. In exchange, Stellantis will receive shares of stock. This funding will also assist in covering incremental manufacturing capital expenditures related to the production of Midnight, Archer’s first eVTOL aircraft.
Is ACHR a Buy?
The stock has been volatile, shedding 50% over the past year as the company prepares for commercialization. It trades at the low end of its 52-week price range of $3.00 – $7.02, demonstrating negative price momentum by trading below its 20-day (3.48) and 50-day (3.72) moving averages. Sporting a P/B ratio of 1.35x, the company trades at a discount to peers in the Aerospace and defense industry, where the average P/B ratio is 2.1x.
Analysts covering the company have been bullish on ACHR stock. For example, H.C. Wainwright analyst Amit Dayal recently initiated coverage with a Buy rating and a $12.50 price target on the shares. He noted the company’s progress toward FAA certification with six Midnight aircraft and strategic partnerships supporting sales ramp and service expansion.
Archer Aviation is rated a Strong Buy based on five analysts’ recommendations and price targets. The average price target for ACHR stock is $10.00, representing a potential upside of 221.54% from current levels.
ACHR in a Nutshell
Pioneering the flying car market, Archer Aviation is a promising growth story. Its potential to disrupt traditional transportation systems and redefine how we commute is undeniably profound. Despite the slump in share price, Archer’s strategic moves, like launching an air mobility network in Los Angeles by 2026 and successfully delivering its first aircraft to the U.S. Air Force, make it an intriguing investment prospect with substantial upside potential.
