Archer Aviation (ACHR -1.13%) is a trailblazer in the exciting new world of air taxis. With its groundbreaking electric vertical takeoff and landing (eVTOL) aircraft, Archer is setting out to revolutionize urban transportation as we know it.
The company is partnering closely with U.S. regulators to bring its game-changing aircraft, Midnight, to the skies. Recently, Adam Goldstein, Archer's founder and CEO, joined leaders from the Federal Aviation Administration (FAA) and the Department of Transportation (DOT) to announce a five-country alliance dedicated to streamlining the certification and deployment of eVTOLs worldwide.
As Archer leads the way in this new form of transportation, investors may be wondering: Is now the time to dive in and buy stock while it's priced below $10.50 per share? Let's explore the potential of this innovative company and what investors have to look forward to.
An Archer Aviation Midnight aircraft. Image source: Archer Aviation.
The future of aerial urban transportation
CEO Adam Goldstein recently joined U.S. Transportation Secretary Sean Duffy and acting FAA Administrator Chris Rocheleau to announce a five-country alliance, which includes the United States, the United Kingdom, Australia, Canada, and New Zealand, to streamline the rollout of eVTOLs globally.
This news bodes well for Archer, a frontrunner in the air taxi industry that has been collaborating with major airlines, including United Airlines and Southwest Airlines. It plans to introduce air taxi services in major U.S. cities, including New York, Los Angeles, San Francisco, and Miami. It hopes to roll out these services as soon as next year, and has been designated as the official air taxi provider for the 2028 Olympic Games in Los Angeles.
Archer has enjoyed robust demand, as evidenced by its order book for its Midnight aircraft, which is valued at nearly $6 billion. This demonstrates strong customer interest and shows the potential for significant growth in the years ahead as Archer fulfills these orders.
The company is actively seeking approvals and certifications, and it appears that President Donald Trump's administration is keen on advancing this technology, helping it progress through regulatory hurdles.
Archer Aviation plans to roll out air taxi services this year
Archer has also introduced a Launch Edition program that allows it to deliver Midnight aircraft to customers in select countries before they receive full certification from the U.S. FAA. The company will roll out its air taxi service in Abu Dhabi, United Arab Emirates, later this year. As part of its initiative, it has chosen Abu Dhabi Aviation (ADA), the largest commercial helicopter operator in the Middle East, as its first "Launch Edition" customer.
The General Civil Aviation Authority (GCAA) of the UAE has collaborated with Archer to create a certification plan for the Midnight aircraft. This plan outlines the necessary steps for the aircraft to enter the UAE market. Furthermore, the first hybrid heliport conversion in the UAE has received design approval, enabling Archer to capitalize on existing airspace regulations, zoning, and structures.
Archer's management is optimistic about meeting its launch timeline, but analysts like Bill Peterson from J.P. Morgan have raised some concerns. He cautions that the commercialization process may take longer than anticipated. If that ends up being the case, Archer stock could take a hit on the delayed timeline.
Is Archer Aviation right for you?
Archer is still in its early stages and hasn't yet started generating revenue. Its primary commercial operations are expected to kick off later this year and into next year in the U.S. However, the company will continue to spend money as it works through the certification process, scales up manufacturing of its Midnight aircraft, and rolls out its commercial services on a wide scale.
Data by YCharts.
As a pre-revenue company, funding is crucial for Archer's chances of success and scaling up. Fortunately, the company is well-positioned in this regard. Following the recent flurry of good news, Archer raised $850 million in funds, its most significant capital raise to date. The company now has over $1.85 billion in capital following the raise.
Although the company has some funding now, it might need to raise more money to expand its production and develop its business as it grows. Another thing to keep in mind is that analysts don't forecast Archer becoming cash-flow-positive until 2028, making further capital raises, which dilute shareholders, a real possibility.
Investors optimistic about the future growth of Archer and air taxis may consider buying some shares today. However, keep in mind that the company has yet to initiate commercial operations and must still achieve regulatory approvals and achieve widespread acceptance of its new mode of travel. For this reason, Archer is best suited for very aggressive investors with a long-term perspective who are willing to endure what will likely be a volatile few years.
