Archer Aviation (NYSE:ACHR) stock has had an exceptional year, with shares up more than 150% so far. However, the electric vertical take-off and landing (eVTOL) company was also recently the recipient of a class action lawsuit filed by law firm Pomerantz LLP. According to FlightGlobal, some of the evidence in the lawsuit was taken from a short report published by Grizzly Research.
Pomerantz filed the complaint on Sept. 21, alleging Archer made “false and/or misleading statements” between Sept. 17, 2021 — the day of the company’s special purpose acquisition company (SPAC) business combination debut — and Aug. 15, 2023. These statements include using “heavily edited videos” to exaggerate the progress and amount of testing that had been done on Archer’s Midnight eVTOL aircraft and misrepresenting “the nature and profitability of its business partnerships.”
CEO Adam Goldstein was named in the lawsuit, along with Chief Financial Officer (CFO) Mark Mesler, former CFO Ben Lu and former co-CEO Brett Adcock.
ACHR Stock: Archer Receives Class Action Complaint
The complaint also mentions that Archer misstated the timeline in which it would receive Federal Aviation Administration (FAA) certification for its Midnight aircraft, which had the effect of delaying commercial production. Additionally, the class action filers allege that Archer’s financial position and forecasts were overstated in order to make the company look better than it actually was. As a result of these allegations, the “Company’s public statements were materially false and misleading at all relevant times.”
“We believe the claims are without merit and we intend to defend ourselves vigorously,” said Archer in response to the complaint.
It’s worth noting that Archer’s Midnight aircraft recently received the FAA Special Airworthiness Certificate, which will allow for the start of flight test operations. Archer also announced last month that the FAA has begun the process of approving certification plans for the Midnight, a stepping stone in allowing Archer to begin “for credit” testing of the piloted Midnight aircraft. This testing is expected to begin early next year.
Still, the class action lawsuit believes that Archer receiving production certification of its Midnight aircraft “seems years away.” It also claims that Archer’s “goal of carrying passengers in 2025 is unrealistic.”
On the date of publication, Eddie Pan did not hold (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.
