Shares of Archer Aviation (ACHR) are down over 9% at the time of writing after the electric vertical takeoff and landing aircraft maker shared its Q2 earnings results and details about its deal with Stellantis (STLA). For Q2, Archer reported an adjusted EBITDA loss of $93.8 million and a net loss of $106.9 million, which has investors concerned about the company’s financial health, especially since it’s still in the pre-revenue phase.
Since the company finished the quarter with $360.4 million of cash and cash equivalents, it will likely continue to rely on equity financing to fund its operations, which will dilute the value of the current outstanding shares. In fact, ACHR raised an additional $230 million in equity financing since its second quarter ended.
However, on a brighter note, Archer reached an agreement with Stellantis, the car giant behind brands like Jeep and Chrysler, to boost their partnership. Stellantis, which has already invested nearly $300 million into Archer, plans to add up to $390 million more for manufacturing and capital expenses to help Archer hit its production targets.
As part of this partnership, Archer will give Stellantis $30 million in performance-based warrants, which will be tied to hitting certain milestones. However, any equity Archer issues to Stellantis will need approval from its shareholders. This collaboration is a big deal for Archer as it looks to ramp up production and become a leader in the urban air mobility market.
Is ACHR a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ACHR stock based on three Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 38% decline in its share price over the past year, the average ACHR price target of $7.88 per share implies 119.19% upside potential.
