Electric vertical takeoff and landing (eVTOL) aircraft are shaping up to be the next chapter in urban air mobility, with industry projections placing the market value at an astounding $1 trillion within the next two decades. As a leader in the space, Archer Aviation (ACHR) is poised to make a significant impact. Despite recent stock volatility, the company continues to show promise, surpassing key milestones, including military airworthiness, Part 135 certification, and securing a strategic partnership with Stellantis.
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Among its recent strides in regulatory approval, the company targets cash flow profitability by 2027, with ambitious production plans ramping to 650 eVTOLs by 2028. Archer appears poised to lead the revolution in urban transportation while offering forward-looking investors an exciting high-risk, high-reward opportunity.
Archer Takes Critical Steps
Archer Aviation is an eVTOL manufacturer developing a new aircraft designed to function as an air taxi for small groups. The aircraft’s top speed is 150 mph, and its range is up to 100 miles. These aircraft promise considerable advantages over traditional helicopters, including lower costs, reduced environmental impact, less noise, higher speed, and superior fuel efficiency, making them more suitable for landing in areas with high population density.
The company recently delivered the first Midnight eVTOL to the U.S. Air Force following the recognition of military airworthiness. Headway is also being made on the testing front. As of September, Archer has conducted 402 test flights, which puts the company four months ahead of the planned schedule. These achievements are essential as they mark a clear regulatory pathway ahead for the company, aiding its ambitions to achieve FAA-type certification, which it hopes to secure by late 2025.
Archer has recently received its Part 135 certification, a requirement for operating commercial air charter or air taxis. This is critical in setting the groundwork for a recently announced air taxi enterprise with Southwest Airlines to establish electric air taxi networks across Southern California by 2026. Furthermore, the company intends to develop charging and operation bases in key areas such as the New York City metropolitan area, Northern California, South Florida, and even international regions like the United Arab Emirates and India.
Analysis of Archer’s Recent Financial Results
Archer’s Q2 financial results showed a net loss of $106.9 million, a significant decrease from the $77.2 million reported in Q2 of 2023. This loss can primarily be credited to a reduction in GAAP operating expenses and a rise in other income. The company’s total operating costs for the period stood at $121.2 million on a GAAP basis and $96.4 million on a non-GAAP basis. This resulted in the company’s earnings per share (EPS) of -$0.32, beating analysts’ expectations by $0.06.
At the quarter’s end, Archer had cash and cash equivalent reserves totaling $360.4 million and $6.7 million in restricted cash. After the quarter, the company raised an additional $230 million via equity financing and secured an extra $400 million in capital from Stellantis.
What Is the Price Target for ACHR Stock?
The stock has been volatile, sporting a beta of 2.27. It has declined roughly 39% over the past year and trades at the lower end of its 52-week price range of $2.82 – $7.02.
Analysts following the company have been bullish on the stock. For example, Canaccord Genuity analyst Austin Moeller recently reiterated a Buy rating on the shares with a price target of $7.50, noting the company’s significant funding round led by Stellantis positions well favorably for future growth.
Based on the recent recommendations of five analysts, Archer Aviation is rated a Strong buy. The average price target for ACHR stock is $10.00, representing a potential upside of 224.68% from current levels.
Final Analysis on ACHR
Archer Aviation is at the forefront of the potentially trillion-dollar electric vertical takeoff and landing (eVTOL) industry. Despite market fluctuations, the company has successfully achieved key milestones, pointing to a promising path forward. With an opportunity to help redefine urban transportation, ACHR offers an exciting prospect for those with a risk appetite.
