Archer Aviation (ACHR 1.02%) has seen its stock price rise around 200% over the past year. But the stock has also suffered through two drawdowns of 30% or more over that span, and is currently in a price pullback. In other words, it has been a bumpy ride. Investors looking at Archer Aviation and thinking it could be a huge investment opportunity need to make sure they understand the risk of turbulence in the business and the stock price.
What does Archer Aviation do?
Archer Aviation makes vertical lift aircraft meant to carry small loads over short distances. Essentially, it is trying to build a business around air taxis. The aircraft it makes is called Midnight and it is currently being tested for safety in the United States and overseas. The big goal right now is to get the final nod from regulators to carry commercial customers.
Image source: Getty Images.
The aerospace industry is highly regulated, which makes sense given the risks when things go wrong. So getting Midnight approved is not an easy process. Nor is it a quick process. It is, basically, a series of little steps.
For example, on Aug. 18 the company announced that it had conducted its longest flight yet, "flying approximately 55 miles in 31 minutes at speeds exceeding 126 mph." About a month later on Sept. 22 Archer Aviation announced that it had reached a new height level, stating that "its Midnight aircraft successfully completed its highest altitude flight to date, reaching altitudes of 7,000 feet."
Basically, little by little, Archer Aviation's capital investments are leading to the big goal: regulator approval. The first big commercial test of Midnight as an air taxi will likely be in Abu Dhabi, where the company is setting up an air taxi service with a partner. That's going to be the hot spot to watch over the next year to see how Archer's business is progressing.
But even after a successful rollout in Abu Dhabi there will be a lot more work to do. The really big goal is for Archer Aviation to set up air taxi services in the United States, with plans already in place for New York and California.
NYSE: ACHR
Key Data Points
The opportunity is huge and it is still early days
There are more avenues for growth than just commercial air taxis, too. The company is also looking at military applications and examining package delivery. It is very early in the development of air taxis, which some investors may find attractive. And it suggests that Archer Aviation, if it succeeds, could be part of a millionaire making portfolio.
There are some risks to consider, however. For starters, Archer Aviation is not the only company attempting to build an air taxi. For example, Joby Aviation is also working toward the same goal. There's probably room for more than one air taxi company, so this isn't exactly a huge negative. But Archer Aviation does have competition.
On a financial level, Archer Aviation's income statement is filled with red ink right now (it lost $206 million in the second quarter). It's a start-up, so that makes complete sense. It is building out the infrastructure it needs and spending heavily on getting regulatory approval. That is money that has to be spent if the company wants to get up and running. But those costs are not going to end anytime soon. In fact, even after regulatory approval, Archer Aviation will likely continue to spend heavily to build out its business.
Ongoing red ink makes the balance sheet exceptionally important to monitor. At the end of the second quarter, Archer Aviation had $1.7 billion in cash and equivalents. That was up from $360 million a year earlier, as the company has been able to raise capital amid its ongoing business progress. In fact, it raised roughly $700 million between the first and second quarters of 2025 alone. It seems highly likely that Archer Aviation has the financial resources to carry it through regulatory approval.
ACHR Shares Outstanding data by YCharts
While having ample cash on hand is good news, it comes with a negative twist. As the chart above highlights, Archer Aviation's share count has steadily risen over the past year. Issuing stock to raise capital is important, but it dilutes existing shareholders who own less and less of the business as each new share is created. If the stock rises enough, that won't matter to anyone, but it will make it harder for the company to grow earnings per share when it actually has profits to report. And that could put downward pressure on the stock.
Archer Aviation is not a slam dunk investment
Archer Aviation has a very exciting story and it looks increasingly likely that it will get to the really big step of achieving regulatory approval for its Midnight aircraft. The problem is that there are a lot more steps after that point before it is a sustainably profitable business. Any setback could lead to a drawdown. Any delay could result in investors looking for other investment ideas. This is not an investment for conservative types and it is one that really requires a long-term view.
Could Archer help you build a seven figure portfolio? Yes, it has an exciting growth story to offer. But expect there to be turbulence along the way. And don't forget that there remains a risk that this unprofitable upstart aerospace company could still fall short of its goals.
