Should You Buy Archer Aviation Stock While It’s Below $18?

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In the last year, shares of Archer Aviation (ACHR) have surged by over 150%. This company, which specializes in electric vertical take-off and landing (eVTOL) aircraft, has been making waves in the market. It’s been successful in forging more partnerships and moving steadily towards obtaining full approval for its U.S. air taxi flights, which has caught investors’ attention.

I’m thrilled about the current state of Archer’s stock, trading just under a dollar from its 52-week high of $13.92 (reached on May 16). However, it’s important to note that it’s still far from Wall Street’s peak price target of $18, which H.C. Wainwright analysts predicted in June. The optimism stems from Archer’s growth strategies: expanding its urban air taxi business, securing government contracts, and diversifying into various industries.

The question now is whether to grab Archer’s stock before it hits the $18 mark, or if we should let it take a break until it earns enough revenue to justify its escalating valuations. The decision is a fascinating one for any investor!

The bull case for Archer Aviation

The Archer’s Midnight electric vertical takeoff and landing (eVTOL) vehicle accommodates a solo pilot and four passengers, boasts a travel range of 100 miles on a single charge, and can attain a top speed of 150 miles per hour. Its sleek, drone-like structure facilitates smooth landings even in bustling city environments, making it an ideal choice for short-range air taxi operations.

Among its prominent clients are United Airlines (UAL), who have committed to purchasing 200 Midnight aircraft; Future Flight Global, with an order for 116 aircraft; and Soracle, a partnership between Japan Airlines and Sumimoto, who have ordered 100 aircraft. Additionally, Ethiopian Airlines and Abu Dhabi Aviation are among its newer customers.

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In the upcoming months, various corporations intend to initiate air taxi routes using Archer’s Midnight aircraft. This vehicle recently concluded its initial test flights in Abu Dhabi and anticipates initiating commercial flights this year. The company is optimistic that it will receive approval from the Federal Aviation Administration (FAA) for its commercial flights later this year, which would pave the way for its first air taxi trips. Archer also has plans to introduce its own air taxi service within the next two years, and it estimates that the cost of these flights will be around the same price as Uber’s premium UberBlack service. To facilitate this launch, Archer has secured a position as the official air taxi services provider for the Summer Olympics in Los Angeles in 2028.

Stellantis (STLA), among Archer’s leading investors, has engaged Archer not only as an investor but also as a contract manufacturer for its own line of branded electric Vertical Takeoff and Landing (eVTOL) aircraft. It is possible that other automobile manufacturers and aviation companies may soon emulate this approach by partnering with Archer to produce their own eVTOL aircraft.

As a passionate advocate, I firmly believe Archer should continue to expand its government contracts. Last year, we successfully handed over our first aircraft to the United States Air Force (USAF) for testing, marking a significant milestone under our contract with the Department of Defense. Over the coming years, we anticipate delivering up to five more aircraft to the USAF, which is truly exciting!

Following the outlined plan, Archer intends to manufacture 10 aircraft in 2025, increasing production to 48 in 2026, then to 252 in 2027, and ultimately reaching 650 aircraft in 2028. This ambitious growth strategy is anticipated to be bolstered by continuous investments from Stellantis, additional funding rounds, and a new artificial intelligence (AI) collaboration with Palantir (PLTR). If this materializes, financial experts predict Archer’s revenue will skyrocket from $13 million in 2025 to an impressive $437 million by 2027.

Given a pending order book of approximately $6 billion, this company is poised to expand further in the coming years, replacing conventional helicopters with its advanced, quieter, and eco-friendly aircraft designs. This could potentially be the reason why insiders have bought significantly more shares than they’ve sold over the past year.

The bear case against Archer Aviation

Archer shows great promise for future growth, however, it hasn’t produced significant income so far. It is projected to incur losses exceeding half a billion dollars per year until 2027, which might necessitate continuous dilution of shares and accumulation of debt just to remain financially stable during its expansion phase.

Over the past three years, its outstanding shares significantly grew by approximately 127%. At the end of its most recent quarter, it maintained a favorable debt-to-equity ratio of 0.2. This beneficial position was partly due to an increase in newly issued shares, which boosted shareholder equity compared to its overall liabilities.

Archer Daniels Midland (ADM) has built a considerable amount of growth into its current valuation. With a market capitalization of $7.7 billion, it is trading at approximately 18 times its projected revenue for the year 2027. While this valuation may appear reasonable in light of its expanding order book, ADM hasn’t fully expanded its business yet. Consequently, any setbacks or delays could cause these valuations to burst and significantly impact its stock price.

Should you invest in Archer Aviation at these levels?

Archer Aviation remains a stock with a high degree of uncertainty, but I think its positive aspects outnumber its negative ones. It’s seizing an early lead in the emerging electric Vertical Takeoff and Landing (eVTOL) aircraft market. Major companies are backing it, its order book is expanding, and it has a well-defined roadmap for the future. If you’re convinced it can meet its lofty objectives, it might be a good investment as it currently trades in the single digits. However, be prepared for significant short-term fluctuations.

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2025-07-21 11:14