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Archer Aviation promises to revolutionize urban air transport with its Midnight aircraft.
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However, major challenges remain before it can begin large-scale commercialization.
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10 stocks we like better than Archer Aviation ›
With shares up by an impressive 307% over the last 12 months, Archer Aviation (NYSE: ACHR) is starting to catch the market’s attention as it aims to help pioneer electric vertical takeoff and landing vehicles (eVTOLs). These are essentially electric helicopters that could revolutionize the urban transportation industry by allowing people to bypass city traffic while reducing global reliance on fossil fuels.
That said, when it comes to buying a stock, investors shouldn’t get carried away by the exciting technology story. Often, a company’s less glamorous fundamentals will give a better idea about how it will perform over the long haul. Let’s dig deeper into Archer Aviation.
Analysts are optimistic about future transportation technologies, including urban air mobility. Morgan Stanley expect this opportunity to be worth $1.5 trillion by 2040 as battery technology improves and companies overcome regulatory hurdles. While eVTOLs will only represent a fraction of the total market, that is probably enough room for early movers to establish a long-term niche.
Archer Aviation is one of those early movers, and it sets itself apart with a unique strategy. Instead of just being an original equipment manufacturer that builds eVTOLs for other companies, it plans to also operate its own global air taxi service. This strategy could expand Archer’s revenue opportunities while allowing it to customize its aircraft to be ideal for its specific operational needs — a possible edge over future rivals.
The company is making impressive progress scaling up both aspects of its long-term strategy. On the manufacturing side, it has partnered with automotive giant Stellantis to construct a 400,000 square foot aircraft manufacturing facility in Covington, GA, where, if things go according to plan, Stellantis will use its expertise to scale up mass production of Archer’s flagship Midnight eVOTL to 650 units annually by 2030.
Archer’s air taxi ambitions also seem to be going according to plan. The company has begun air taxi test flights in Abu Dhabi, United Arab Emirates, alongside the country’s aviation regulators (management expects commercial payments later this year). Archer has also been selected as the “Official Air Taxi Provider” of the 2028 Olympic Games in Los Angeles, which may suggest a favorable regulatory outlook in the U.S.
