Shares of Archer Aviation (ACHR 7.88%) descended on Friday after the electric aircraft developer announced a share sale to fund the purchase of Hawthorne Airport in Los Angeles, California.
By the close of trading, Archer's stock price was down more than 7% after sinking as much as 19% earlier in the day.
Archer Aviation's Midnight eVTOL aircraft. Image source: Archer Aviation.
A new hub for Archer's flying taxis
Archer plans to use some of the proceeds from its $650 million stock sale to purchase Hawthorne Airport for $126 million. The company notes that Hawthorne is less than three miles from Los Angeles International Airport (LAX), one of the world's busiest airfields.
Archer intends to use Hawthorne as the operational hub for its forthcoming LA-based air taxi network. In May, Archer was selected as the official air taxi provider of the LA28 Olympic and Paralympic Games.
The electric vehicle maker also aims to use Hawthorne Airport as a test site for cutting-edge aviation technologies, such as artificial intelligence (AI)-driven air traffic control solutions.
NYSE: ACHR
Key Data Points
Investors are skittish about the costs
Archer's electric vertical takeoff and landing (eVTOL) aircraft, Midnight, is progressing toward Federal Aviation Administration (FAA) certification. The aircraft recently completed its longest piloted flight, spanning 55 miles, and its highest altitude flight, reaching 10,000 feet.
However, the company has yet to earn revenue, so it needs its cash reserves to last until it can launch its air taxi operations. Investors appear to be concerned that the costs of running an airport will force Archer to burn through cash faster. That could bring about more share sales, as well as the dilution that comes with them.
