Archer Aviation: Too Early to Sound the Alarm?
💡 Key Takeaway
Archer Aviation's stock has plunged but its $6 billion backlog and Stellantis backing suggest waiting for FAA certification could be prudent.
What Happened to Archer Aviation's Stock?
Archer Aviation (ACHR), a pioneer in electric vertical takeoff and landing (eVTOL) aircraft, hit a record high of $17.14 per share in February 2021 after going public via a SPAC merger. Since then, its stock has plummeted to under $5, as the company missed lofty production targets.
Archer originally claimed it could build 10 eVTOLs in 2024 and 250 in 2025. However, to date, it has only produced two test aircraft and one full-scale Midnight prototype. The Midnight can carry a pilot and four passengers, travel up to 100 miles, and reach 150 mph.
In contrast, competitor Joby Aviation (JOBY) is further advanced in FAA certification and has a superior aircraft with longer range and higher speed. Archer also has no meaningful revenue and is burning cash, leading to investor skepticism.
Despite these setbacks, Archer has a $6 billion indicative backlog representing orders for roughly 1,200 aircraft. Major investor Stellantis (STLA) remains committed to helping ramp production once FAA approval is granted. Early customers include United Airlines and Abu Dhabi Aviation.
Archer plans to serve third-party customers and launch its own air taxi service, unlike Joby which focuses on its own fleet. The company expects revenue to grow from $9.5 million in 2026 to $428.4 million by 2028 as certification and production accelerate.
Why It Matters for Investors
Archer's steep decline highlights the risks of investing in pre-revenue SPAC stocks with aggressive promises. The eVTOL market is nascent, and FAA certification is the key catalyst. Archer's slower progress versus Joby means it may lag in capturing early market share.
However, Archer's valuation has become more attractive. With a market cap of $3.6 billion, it trades at 7 times estimated 2028 sales. Joby, with an $8.5 billion market cap, trades at 19 times 2028 sales, making Archer relatively cheaper if it can execute.
The stock's downside appears limited given the strong backlog and Stellantis backing. The biggest risk is further FAA delays or loss of key customers. If Archer secures certification, the stock could rally significantly.
Investors should watch for FAA progress, production milestones, and any partnership expansions. The eVTOL sector remains speculative, but Archer's positioning as a low-cost producer could pay off long-term.
Source: The Motley Fool
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.
Bobby Insight
Hold Archer Aviation shares until FAA certification progress becomes clearer, given the backlog and backing.
While Archer lags Joby in certification and has missed targets, its $6 billion backlog and Stellantis investment provide a cushion. The stock's valuation at 7x 2028 sales is reasonable, making a sale premature. Risks remain, but the potential upside from certification warrants patience.
What This Means for Me
