2 Reasons Not to Take Archer Aviation Stock for Granted


  • Never underestimate what Archer Aviation (ACHR) can do in the coming months.
  • Cathie Wood has showed her continued support for ACHR stock.
  • Archer secured $142 million in contracts with the U.S. Air Force.
ACHR stock - 2 Reasons Not to Take Archer Aviation Stock for Granted

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Archer Aviation (NYSE:ACHR) stock has surged 226% year-to-date. Like all high-flying stocks, it’s possibly due for a correction.

Still, it’s a top flying car stock to watch. A 20% dip could offer an entry point for future gains. Archer recently got FAA approvals for flight tests in early 2024, a potential catalyst for ACHR stock.

Let’s look into the following reasons ACHR should be in your portfolio now.

Cathie Wood Bought More ACHR Stock

Cathie Wood’s Ark Invest funds increased their holdings in eVTOL manufacturer Archer Aviation (ACHR) last month across several ETFs.

Archer makes up roughly 1% of ARKK’s portfolio. ACHR’s stock started today at $6.39, reaching its yearly high at $7.49 in late August. Archer’s market cap is around $1.8 billion, with no reported revenue.

Ark started these trades following Archer’s partnership with Boeing’s Wisk Aero, resolving a lawsuit and securing $215 million in PIPE funding. Archer had $675 million in liquidity last month.

Archer secured a $142 million contract with the U.S. Air Force for six eVTOL aircraft. Major airlines like Delta, American, and United are investing in eVTOLs as air taxis. FAA plans to approve air taxi services by 2025, with Archer revealing its Midnight eVTOL on Sept. 12.

Solid Fundamentals

Archer Aviation finished Q2 with $407.6 million in cash, benefiting from Stellantis’ $25 million credit. Reduced cash burn of $67.3 million ensures funding for six quarters leading up to commercialization in 2025.

The Boeing partnership and $215 million investment from Stellantis, United Airlines, and Boeing are significant developments.

This may help Archer address pilot shortages, and they’ve settled the lawsuit on undisclosed terms.

The $215 million investment includes $70 million from Stellantis, with $145 million in new funds and $55 million untapped, resulting in $677.6 million in cash for a 10-quarter runway to 2025 commercialization.

What Now

Archer, although revenue-free, secured FAA certification for its Midnight vehicle. This allows it to fly in U.S. airspace, targeting Department of Defense deliveries and commercial operations by 2025.

The future of this industry is uncertain, but it appears poised for growth. Morgan Stanley (NYSE:MS) predicts the urban air mobility market could reach $29 billion annually by 2030 and exceed $1 trillion by 2040.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/2-reasons-not-to-take-archer-aviation-stock-for-granted/.

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