Against the backdrop of a solidly positive performance on Wall Street, shares of electric vertical take-off and landing (eVTOL) aircraft developer Archer Aviation (NYSE:ACHR) popped higher thanks to a compelling partnership. Inking a memorandum of understanding (MOU) with the Abu Dhabi Investment Office (ADIO), Archers aims to launch an all-electric air taxi service across the United Arab Emirates (UAE). Subsequently, ACHR stock jumped on the broader implications.
According to the accompanying press release, the MOU outlines several initiatives. First, Archer has the goal of starting its air taxi service in 2026. Further, the ADIO will lend support to Archer’s efforts through various incentives. As well, the eVTOL specialist is building an engineering Center of Excellence to support the wider air mobility industry in the UAE and across the Middle East.
Perhaps best of all, the initiative has garnered strong institutional support. Mubadala Capital, an asset management subsidiary of Abu Dhabi sovereign wealth fund Mubadala Investment Company, represents one of Archer’s investors. Moreover, Archer will showcase its five-seat air mobility craft Midnight to the region for the first time at the Dubai Airshow.
ACHR Stock Jumps on Massive Addressable Market
Since the beginning of this year, ACHR stock skyrocketed more than 170%. Recently, though, shares suffered a correction, shedding about 17% of equity value in the trailing month. Nevertheless, Archer’s announcement today helped reinvigorate sentiment thanks to the massive total addressable market.
According to Precedence Research, the global eVTOL aircraft market size reached a valuation of $11.15 billion last year. Further, experts project that the segment will reach $35.79 billion by 2032, representing a compound annual growth rate (CAGR) of 12.37%.
Within this sector, the Middle East could be a compelling opportunity. Along with the ability to decrease urban travel times significantly, the eVTOL industry could attract significant foreign investment and job opportunities. Potentially, this dynamic could be a substantial catalyst for ACHR stock, which presently commands a market capitalization of around $1.34 billion.
As well, ReportLinker notes that the Middle East accounts for 7% of the ultralight and light aircraft market. Thus, a large addressable market exists, with Archer establishing a possible stronghold.
Why It Matters
According to TipRanks, ACHR stock enjoys a unanimous strong buy rating among four expert opinions. Also, the average price target lands at $9.50, implying just over 81% upside potential. The high-side target clocks in at $12, implying 129% growth.
On the date of publication, Josh Enomoto 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.
