Archer Aviation (NYSE:ACHR) presents an intriguing conundrum for investors, offering both enormous promise but also plenty of risks. While the eVTOL pioneer seeks to fill the sky with passengers jetting to and fro, the pre-revenue company has yet to achieve financial liftoff and continues to bleed cash.
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Indeed, Archer stands at an interesting inflection point. The company is making clear progress with its Midnight aircraft, completing flights of greater than 50 miles that reached altitudes of 10,000 feet. It has also inked partnerships with major aviation players such as United Airlines, and just recently completed the first phase of its acquisition of Hawthorne Airport in Southern California.
Archer is also moving forward with FAA Type Certification, with Phase 4 currently in process. And yet, much of the company’s commercial hopes and aspirations rest on obtaining regulatory approval, a significant milestone with no guarantee of success.
Top investor Reuben Gregg Brewer digs into the various reasons to buy, sell, and even hold ACHR. While both the bull and bear camps have strong arguments, he believes one thing is fundamentally clear.
“If you are risk-averse, you probably shouldn’t even consider owning this high-risk stock,” declares the 5-star investor, who is among the top 1% of stock pros covered by TipRanks.
On the plus side, Brewer notes Archer’s “material strides” in pursuit of going commercial. He points out that Midnight is working its way through the regulatory process, with partners in the UAE, Japan, Korea, and Indonesia eager to take flight. The potential in the U.S. is also very real, pending regulatory approval, with hubs in New York and California part of the plan.
“If you believe that air taxis will change the way people travel in large cities, then you might want to take a ride with an investment in Archer Aviation,” adds Brewer.
Still, that’s the glass-half-full approach. There’s also a scenario where things go bottom-up, and Brewer points out that at present the company is a “money-losing start-up” working to develop a brand new technological field.
While he deems it unlikely, Brewer floats the very real possibility that Midnight never achieves commercial liftoff. In other words, this investment isn’t for the faint of heart.
“It is only suitable for more aggressive investors, and even then, only for those who are willing to hold an investment for the long term,” concludes Brewer. (To watch Reuben Gregg Brewer’s track record, click here)
For its part, Wall Street is leaning positive. With 4 Buys and 2 Sells, ACHR enjoys a Moderate Buy consensus rating. Its 12-month average price target of $12.17 implies a potential upside of ~47%. (See ACHR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.