Let's cut to the chase: If you have an appetite for risk, and you can stomach near-term volatility, Archer Aviation (ACHR -0.87%) at less than $6 a share might be your next best buy.
That's not because the company is safe, secure, or stable. Quite the contrary: This maker of eVTOL (electric vertical take-off and landing) aircraft is burning through millions of dollars each quarter, generates no meaningful revenue, and still hasn't secured the FAA certification it needs to commercialize its air taxi operations in the United States.
That's the risk. Here's the opportunity.
Image source: Archer Aviation.
Archer is no longer just developing an air taxi, Midnight, for city travel. It is also developing aircraft for defense and commercial purposes. Indeed, its recent push into these segments -- through the autonomous platform it has co-developed with Anduril -- could give it a source of revenue before paying passengers ever step into a fully certified Midnight vehicle.
In the same vein, a pending acquisition of Boeing's (BA +0.83%) Insitu would take this defense business even further. Insitu, essentially a drone business, already generates $200 million a year. That's roughly 29 times more than Archer's trailing-12-month revenue of about $7 million.
NYSE: ACHR
Key Data Points
Insitu is great, but I'm even more interested in Wisk, another Boeing business that Archer plans to buy. Wisk has spent years developing autonomous eVTOLs, and Archer could eventually integrate that technology into the Midnight model. If Midnight were to earn authorization to fly as a fully autonomous vehicle, Archer's air taxi business would eliminate a major recurring expense: training and paying pilots.
Granted, many risks still surround Archer -- FAA type certification and manufacturing eVTOLs at scale, just to name two. But even though the risks are the same, the potential rewards are starting to look bigger. Today's price for Archer stock could look awfully cheap in retrospect if the company grows into the broader aerospace business it is now trying to become.
