Air mobility specialist Archer Aviation (NYSE:ACHR) — which specializes in developing electric vertical takeoff and landing (eVTOL) aircraft — saw its shares dip on Monday amid a slow day on Wall Street. Still, the fundamentals appear positive as Archer has ironed out a major deal with automotive giant Stellantis (NYSE:STLA). With exciting projects in the pipeline, investors are keeping close tabs on ACHR stock.
Primarily, Archer is set to receive new funding from Stellantis, which includes up to approximately $370 million to help cover labor costs associated with projected manufacturing, according to a report from Design & Development Today. Archer aims to manufacture 650 eVTOL units annually. On the other end of the deal, Stellantis will receive shares of STLA stock “on a rolling quarterly basis based on the total labor costs incurred in a particular quarter.”
In addition, Stellantis will add approximately $20 million to the table to help cover incremental manufacturing capital expenditures related to the production of Midnight, Archer’s first eVTOL aircraft.
Still, one of the reasons why ACHR stock hasn’t generated much positive momentum may be due to valuation concerns. Currently, shares are trading at a very high projected revenue multiple relative to the underlying aerospace and defense industry. Equity dilutive transactions don’t help matters. However, as InvestorPlace’s Samuel O’Brient noted, the company posted better-than-expected earnings results for the second quarter.
Moreover, the company is working on several exciting projects. Here are three things to know about ACHR stock.
Los Angeles Air Taxi Network Could Change the Game
Archer recently disclosed plans for an air taxi network in Los Angeles. Per Design & Development Today, the planned network “includes vertiports at key locations such as Los Angeles International Airport (LAX), Orange County, Santa Monica, Hollywood Burbank, Long Beach and Van Nuys.”
As O’Brient mentioned, Angelinos have complained about worsening traffic problems despite the population declining. One of the complaints centers on the limited availability of public transportation. Potentially, air mobility can help ease the burden, making ACHR stock intriguing from a long-term perspective.
ACHR Stock May Get an NFL-Sized Boost
As part of the network planning, Archer is collaborating with the NFL’s Los Angeles Rams. The collaboration involves potential exclusive vertiports at Woodland Hills and Hollywood Park, the 300-acre district centered around SoFi Stadium, where the Rams play.
Archer is also in talks with the University of Southern California to be incorporated into the network.
Archer Goes on Defense
Earlier in August, the Department of Defense assessed that Archer’s Midnight eVTOL was airworthy under military standards. Subsequently, the air mobility specialist delivered Midnight to the Air Force.
The military branch sent personnel to work alongside Archer’s flight test team at the company’s facility in Salinas, California. During the testing, the Air Force “executed simulated medical evacuation, cargo, intelligence, surveillance and reconnaissance flights” using the eVTOL aircraft.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
