Archer Aviation (NYSE:ACHR) is charting a new course in air travel, capturing investors’ attention along the way. With plans to transport high-wealth individuals using electric vertical take-off and landing vehicles (eVTOLs), the company has been soaring on a wave of market buzz.
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Propelled by news of a $6 billion order backlog and positive progress toward FAA certification, ACHR shares have soared nearly 100% over the past month (despite pulling back 20% from November’s peak).
However, with regulatory approvals still pending both domestically and internationally, and commercial operations yet to commence, ACHR’s ascent is driven more by the allure of future potential than present-day revenue.
While it’s hard to argue with the stock’s recent performance, one investor, known by the pseudonym Deep Value Investing, believes the recent surge is coming in for a landing.
“I believe the current bull run may end soon due to the lack of immediate news to fuel the shareholder excitement, but I foresee more rallies moving ahead,” the 5-star investor opined.
Longer term, Deep Value has some concerns regarding ACHR’s business model. The investor argues that the availability of charging stations at commercial helipads will place limits on the company’s growth.
“I remain skeptical about the scalability of eVTOL commercial operations in high-density cities due to limited (physical) space for additional infrastructure at urban heliports,” Deep Value remarks.
But not all is doom and gloom. According to the investor, the completion of Archer’s manufacturing site in Georgia and the possibility of regulatory approvals in global markets – notably the UAE and Japan –could reignite the stock’s upward momentum at some point.
Deep Value also emphasizes the company’s financial strength, highlighting its cash reserves of over half a billion dollars — sufficient to sustain operations for at least another 15 months.
For now, though, the investor concludes that “the current rally could be close to its end,” assigning ACHR shares a Hold (i.e. Neutral) rating. (To watch Deep Value’s track record, click here)
Wall Street is singing a slightly different tune. With 4 Buy and 1 Hold recommendations, ACHR enjoys a Strong Buy rating. Its 12-month average price target of $9.70 implies ~26% upside in the coming year. (See ACHR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
