Electric vertical takeoff and landing (eVTOL) aircraft stocks have been on fire since the start of the fourth quarter of 2024. Investors have piled into these speculative growth stocks for a bevy of reasons in recent months, including major regulatory breakthroughs in the UAE, Japan, and the U.S., that potentially pave the way for the first commercial flights later this year. Moreover, the eVTOL market is forecast to grow into a multitrillion-dollar space over the next two decades, creating a compelling opportunity for investors to get in on the ground floor of an explosive trend.
Archer Aviation (ACHR -0.10%) has been among the space's best performers, with shares up 95% over the prior six months. With shares hovering around the $10 mark in recent trading sessions and sporting a $4.53 billion market cap, reaching $20 in 2025 would require the company's valuation to top $10 billion -- a feat that likely requires a major catalyst beyond commercial aviation progress.
Image source: Getty Images.
With this valuation challenge in mind, let's dive into the factors that could drive this American eVTOL leader to $20 a share in 2025.
Military momentum
A transformative partnership with private defense technology firm Anduril could accelerate Archer's path to profitability by years. The exclusive agreement focuses on developing hybrid vertical takeoff and landing aircraft targeting Department of Defense programs, positioning Archer to potentially secure substantial military contracts well ahead of full-scale commercial operations. This strategic move allows Archer to tap into the lucrative defense market, potentially generating significant revenue streams even before its civilian commercial operations take flight.
The military focus gained additional credibility when retired Lieutenant General Scott Howell joined Archer Defense's advisory board this month. His extensive special operations background strengthens the company's ability to secure defense contracts as America attempts to establish a commanding lead over China in eVTOL technology.
The company's strong financial position, including a recent $430 million capital raise, provides ample resources to pursue these military opportunities while simultaneously building out its commercial fleet. This combination of seasoned military leadership, ample funding, and a laser-sharp strategic focus on execution positions Archer as a front-runner in the race to secure lucrative defense contracts -- perhaps sooner than most expect.
Manufacturing readiness
The recent completion of Archer's 400,000-square-foot Georgia manufacturing facility demonstrates concrete progress toward both military and civilian production goals. Connected to Covington Municipal Airport, this plant will enable auto giant Stellantis (STLA 1.23%) to assist Archer in ramping up aircraft production in 2025. Archer's management plans to produce two aircraft monthly by year-end, before scaling to 650 units annually by 2030.
The facility's completion on schedule and within its $65 million budget showcases Archer's strong execution capabilities -- a critical factor for potential military customers. This manufacturing infrastructure, combined with Stellantis's expertise, provides the foundation required to deliver on defense contracts and civilian commercial orders.
The path to $20 a share
Doubling Archer's market cap to over $10 billion in 2025 requires more than just progress on commercial aviation goals. It hinges on capitalizing on several key catalysts:
- Military contracts: A major military contract announcement would validate the Anduril partnership and provide substantial revenue visibility years ahead of schedule. As tensions with China drive increased U.S. investment in emerging aviation technology, Archer's position as a leading American eVTOL manufacturer could help it secure crucial defense programs in 2025 and beyond.
- Manufacturing capabilities: Archer's established manufacturing capabilities, including its new Georgia facility and partnership with Stellantis, are crucial for unlocking the company's commercial potential. Scaling production and delivering on commercial orders will be essential for driving revenue growth and achieving the $20 price target.
- Strategic partnerships: In addition to its existing partnerships, securing additional strategic alliances with key players in the industry could further accelerate Archer's growth trajectory. These partnerships could provide access to new markets, technologies, or funding opportunities.
Archer's dual focus on defense and commercial applications uniquely positions it to capitalize on the growing need for American technological leadership in the eVTOL space. This strategic advantage, combined with its manufacturing capabilities and potential for securing lucrative military contracts, could propel its stock price to new heights, potentially reaching the $20 mark in 2025.
The verdict
Barring a marketwide pullback, Archer's shares could feasibly go on another sustained rally to hit the $20 mark this year. But it will most likely require securing a major defense contract, along with achieving key milestones in its commercial aviation business, such as obtaining FAA-type certification and securing additional preorders for its Midnight aircraft.
The good news for shareholders is that the political climate is highly favorable for such a deal. As a result, Archer stock scans as a potentially lucrative investment opportunity for those comfortable with high-growth, high-risk stocks, regardless of near-term price fluctuations.
