Archer Aviation (ACHR) has soared 81% over the past year, significantly outperforming benchmark indices. As the maker of the electric-powered aircraft Midnight, ACHR has captured not only consumers’ imagination but also investors’ attention. As investors ask what the future holds for ACHR and the broader air mobility segment, consumers are asking when they can buy their first vehicle and how much it will cost.
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The answer to both is coming up.
Given the company’s high-risk, high-reward nature, I view it as a compelling investment at current levels backed by strong strategic alliances and several incoming price catalysts from the defense sector. If the big defense sector players are going long on Archer, maybe so should I.
Introducing the Future of Urban Mobility: eVTOL
Electric vertical takeoff and landing vehicles (eVTOLs) are positioned to revolutionize urban transportation. Functionally similar to helicopters, they offer vertical takeoff and landing without requiring runways.
However, they are quieter, emission-free, and more environmentally friendly. These all-electric aircraft could serve as future air taxis, reducing travel times from hours to mere minutes in densely populated cities worldwide.
Archer Levitates Into a $5 Billion Opportunity
According to Mordor Intelligence, the total addressable market for urban air mobility is expected to reach $5 billion by 2030, growing at an impressive 23% per year over the next five years. Given this potential, ACHR has already secured a market capitalization of around $4 billion despite generating no revenue thus far.
Archer Aviation has yet to report revenues as it awaits regulatory approvals. However, the company is rapidly ramping up production of its eVTOL Midnight. The aircraft holds significant growth potential in both commercial and defense sectors.
ACHR is in the final phase of the FAA’s Phase-4 type certification process and expects to begin reporting revenues as early as this year. Moreover, ACHR has secured over $6 billion in pre-orders for Midnight, positioning itself for substantial growth once commercialization begins.
However, one cannot completely ignore the challenges that may not make the aspirational growth projections a reality. They include regulatory approvals, the need for dedicated takeoff and landing infrastructure, safety concerns associated with new air mobility technology, and the possibility of incurring higher costs than traditional urban transportation solutions like Uber and Lyft. Potential shareholder dilution due to the recent doubling of authorized shares is also an issue.
Several Defense Sector Price Catalysts for ACHR in 2025
Archer’s new business unit, Archer Defense, has attracted investor interest, particularly following the recent political changes in the U.S. White House. Donald Trump’s pro-defense stance will assist companies like ACHR with future commercialization opportunities. It makes sense then that ACHR’s production is ramping up. The company completed its high-volume manufacturing facility in Georgia, with production expected to begin in early 2025. The facility will scale two aircraft per month by year-end, with a long-term target of 650 aircraft annually by 2030.
Notably, ACHR’s defense business advisory board includes prominent retired military leaders, such as Lieutenant General (Ret) Scott Howell. While defense contracts may take time to materialize, they could significantly boost ACHR’s long-term revenue and earnings growth.
Strategic Partnerships Fuel Near-Term Expansion
Impressively, ACHR has won several meaningful partnerships across the world. It has collaborated with American defense technology company Anduril to develop a hybrid aircraft for the defense sector. ACHR has also partnered with Soracle, the joint venture between Japan Airlines and Sumitomo Corporation, to commence air mobility services in Japan. Its Midnight aircraft has secured an order of around $500 million, with Soracle taking ACHR’s total order book to a reassuring $6 billion, considering ACHR’s embryonic developmental stage.
ACHR is also collaborating with the Abu Dhabi Investment Office to commence commercial air taxi services in the UAE toward the end of 2025. It’s unsurprising to see ACHR having a high percentage of institutional owners. Notably, the ACHR’s ownership structure is a mix of institutional, retail, and individual investors. Approximately 22.61% of the company’s stock is owned by institutional investors, 34.74% by insiders, and 42.66% by public companies and individual investors.
If the smart money likes ACHR, regulatory hurdles will likely fall quickly.
How High Can Archer Aviation Stock Go?
Despite the company’s various risks, Wall Street is optimistic about Archer Aviation stock. On TipRanks, the stock carries a Strong Buy consensus rating based on six Buy, two Hold, and zero Sell ratings over the past three months. Notably, not a single analyst rates ACHR as a Sell.
Currently, Archer Aviation’s average price target of $11.38 per share implies an almost 26% upside potential from current levels.
Midnight Could Put ACHR Skybound
Archer Aviation has the potential to shape the future of urban air mobility. While it faces regulatory and operational challenges, its strategic alliances and strong growth roadmap make it an attractive investment for risk-tolerant investors. The company’s flagship design, Midnight, has the hallmarks of becoming the classic first model, which later generations look back upon to know what the first one looked like — similar to how the Ford Model A set the standard for automobiles back in 1903.
Weighing up the risks and rewards, I see ACHR as a high-risk, high-reward opportunity worth considering at current levels. As the company builds up its customer base and eVTOL technology is gradually adopted worldwide, the risk of owning this stock will decline and eventually become like owning Ford or Toyota shares. Getting in at the ground floor of this technology being commercialized could be the best decision long-term value investors can make.
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