It's pretty cool when science fiction becomes reality. The idea of flying taxis shuttling people to airports and other transport hubs quickly and safely has long been the stuff of sci-fi movies. But now, Archer Aviation (ACHR 1.00%) is working to make this futuristic vision an everyday occurrence. And it's further along than most investors think.
Archer's progress, however, hasn't escaped the notice of Cathie Wood. The closely followed investment manager has been scooping up the flying electric vehicle (EV) maker's shares for her popular funds, including Ark Innovation ETF (ARKK 1.05%), the Ark Autonomous Technology & Robotics ETF (ARKQ 2.52%), and the Ark Space Exploration and Innovation ETF (ARKX 3.13%).
Here's why you might want to consider following Wood's lead and invest in Archer Aviation's stock today.
The virtues of eVTOL
Archer is a leading developer of all-electric vertical take-off and landing (eVTOL) aircraft. Its first production aircraft, Midnight, is designed to usher in a new but potentially massive urban mobility market.
With its EVs capable of speeds of up to 150 miles per hour, Archer wants to replace 60-minute commutes by car with 10-minute air taxi flights. With its payload capacity of more than 1,000 pounds, Midnight can easily carry a pilot and four passengers plus luggage. It's intended to ferry people on trips of approximately 20-50 miles, though it can travel up to 100 miles. Charging the aircraft in between trips takes just 12 minutes.
Midnight is expected to be safe, quiet, and sustainable. Its electric motors have fewer moving parts than gas turbine or piston engines. Combined with the redundancy that's built into the aircraft, this reduces the risk of operational failure. Midnight's design -- which features 12 small propellers rather than one large rotor -- also makes it nearly 1,000 times quieter than a helicopter. Better still, the aircraft's all-electric architecture produces zero operating emissions.
Archer Aviation's Midnight aircraft has a sleek design and an array of notable performance attributes. Image source: Archer Aviation.
Industry giants are lining up to partner with Archer
That impressive list of features has caught the attention of some big-time backers. Boeing (BA 0.25%), United Airlines (UAL -1.25%), and Stellantis (STLA 0.57%) have all made equity investments in Archer. After its latest $215 million investment round, the EV maker has raised a total of more than $1.1 billion in funding.
Commenting on this strong investor support, Archer founder and CEO Adam Goldstein said:
At Archer, we're investing in changing the future of mobility, and we're focused on building a sustainable business with huge growth potential. You have to align yourself with investors who understand that and think long-term. I couldn't be prouder of the investors who participated in this round as they truly understand and embrace that.
Several of Archer's investors are providing more than just financial support. Stellantis is Archer's manufacturing partner. The auto titan is helping Archer bring its facility in Covington, Georgia, on line. The two companies expect production of Midnight aircraft to begin in mid-2024, with an initial capacity of 650 vehicles per year.
United Airlines, meanwhile, is working with Archer to bring the first commercial electric air taxi routes to the U.S. The companies have already selected takeoff and landing sites in New York City, Newark, and Chicago, with more locations expected to be announced in the coming months. Additionally, United Airlines has placed orders for up to $1.5 billion worth of Archer's aircraft.
The U.S. military has also expressed interest in Archer's technology. The U.S. Air Force awarded Archer contracts worth up to $142 million for six Midnight aircraft, as well as flight test data, pilot training, and maintenance operations. With its impressive lift capability, low noise profile, and reduced maintenance requirements, Midnight could prove superior to helicopters for a variety of missions, such as personnel transport, logistics support, and even rescue operations.
A massive growth opportunity
Transportation and defense are enormous industries. The urban air mobility market alone could reach $1 trillion by 2040, according to Morgan Stanley.
Archer has made tremendous progress toward becoming a significant player in these markets. It's developed potentially transformative eVTOL technology, raised over $1 billion in funding from committed backers, and partnered with leading manufacturing experts. Archer also recently received a key airworthiness certificate from the Federal Aviation Administration (FAA) that will allow it to begin flight test operations.
Together, these accomplishments place Archer on track to achieve its goal of commencing commercial operations by 2025. Its revenue should begin to grow rapidly at that time.
Looking further ahead, Archer aims to deploy 6,000 aircraft by 2030. Achieving that target could position the EV upstart to become a profit powerhouse in the next decade.
With its market value standing at only slightly above $1 billion today, investors who buy Archer's shares have the opportunity to earn handsome returns as it fulfills its awesome growth potential.
