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After Starting Rough, Archer Aviation Stock (NYSE:ACHR) Can Spread Its Wings
Stock Analysis & Ideas

After Starting Rough, Archer Aviation Stock (NYSE:ACHR) Can Spread Its Wings

Story Highlights

Blurring the line that previously separated science fiction from science fact, ACHR’s approach seeks to seamlessly incorporate eVTOL travel into everyday life. Further, its key advantages could lift the already-hot stock even higher.

While advanced mobility discussions have largely centered on our roadways, the promise of electric vertical takeoff and landing (eVTOL) aircraft has drawn significant attention to sector player Archer Aviation (NYSE:ACHR). While the company got off to a rough start as a publicly-traded enterprise, Archer benefits from key advantages that could see it win in the competitive sphere. I am bullish on ACHR stock because it’s distinguishing itself from the rest of the pack.

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ACHR Stock Enjoys Numerous Upside Opportunities

Primarily, the optimistic case for ACHR stock centers on the seemingly boundless upside opportunities available. According to one industry estimate by Global Market Estimates, the global eVTOL market size reached a valuation of $8.6 billion last year. By 2027, the sector could hit a valuation of $30.8 billion, representing a compound annual growth rate (CAGR) of 15.5% from 2022.

Of course, that’s not an exclusive benefit to ACHR stock. As competing enterprises in the air mobility industry demonstrated, more countries are tuning into the conveniences and reduced environmental impact of eVTOLs. However, it’s safe to say that whichever company establishes itself as a leader in the burgeoning arena would have a significant impact.

Subsequently, Archer Aviation deserves a much closer examination. Primarily, eVTOLs emit far less noisy sound emissions than helicopters. Per Archer’s website, its eVTOL aircraft incorporates a design such that noise reaching the ground from its cruising altitude of 2,000 feet will emit about 45 A-weighted decibels. That’s almost 100 times quieter than a helicopter, per the company’s claims.

For residents of major urban centers, replacing helicopters with eVTOLs would be a godsend. However, wishing such an event to materialize is obviously much different from seeing it come to fruition. For that, Archer has partnered with automaker Stellantis (NYSE:STLA), thereby fostering synergies as the two forge a pathway toward holistic electric mobility.

In addition, Archer received multi-million-dollar investments from major backers, including aerospace stalwart Boeing (NYSE:BA) and commercial carrier United Airlines (NASDAQ:UAL). With so much significant vested interest, that adds a layer of confidence for ACHR stock.

Mission-Focused Directive Distinguishes Archer

Another key advantage that can possibly boost ACHR stock for the long haul is its mission-focused directive. To be sure, the fact that electric power is on the road to replacing combustion-based air transportation brings with it multiple possibilities. However, Archer is avoiding the temptation of biting off more than it can chew, choosing to stay in its lane.

According to its website, Archer’s Midnight eVTOL aircraft features a range of up to 100 miles. At first glance, that might seem a disadvantage. Notably, Archer’s rival Joby Aviation (NYSE:JOBY) features a range of more than 150 miles. It can also carry a maximum payload of 1,000 pounds.

However, Archer has a specific goal in mind: “transform inter-city travel, replacing 60-90 minute commutes by car that can take over an hour in traffic with ~10-20 minute electric air taxi flights that are safe, sustainable, low noise and cost competitive with ground transportation.”

Granted, that’s an ambitious undertaking. Still, with the focus centered on quick flights with minimal charging in between, Archer avoids unnecessary research and development to milk out performance metrics that extend beyond the Midnight’s core purpose.

Of course, any directive carries pros and cons. Nevertheless, given the many regulatory hurdles that the eVTOL sector must overcome – let alone consumer integration concerns – Archer’s focus on a specific segment of the eVTOL pie may actually mitigate risk.

Fundamentally, it just might not make sense to do more than is necessary in a nascent, frontier industry.

Finances Show That Archer is a Narrative Play

When it comes to the financial value of ACHR stock, it’s a matter of subjectivity. Currently, Archer is a pre-revenue enterprise. Also, it’s not entirely clear when it may become profitable. So, it doesn’t make a whole lot of sense to play the valuation game. Unfortunately, the nature of the beast is that you’ve got to bank on the narrative.

For that, Archer’s backing from major blue chips, along with its focused directive, may convince those on the sidelines to take a shot at ACHR stock. Still, nothing will take away from the reality that, at this moment, Archer is almost pure speculation. I would just argue that it’s rational speculation.

Is ACHR Stock a Buy, According to Analysts?

Turning to Wall Street, ACHR stock has a Strong Buy consensus rating based on four Buys, one Hold, and zero Sell ratings. The average ACHR stock price target is $8.13, implying 24.1% upside potential.

The Takeaway: ACHR Stock Offers a Smart Flight to Gamble On

Despite its pre-revenue status, Archer Aviation offers compelling growth potential as a key player in the booming eVTOL market. Its quieter aircraft, coupled with strategic partnerships with industry giants and a mission-oriented approach, attract investors seeking long-term gains. With analysts bullish and significant upside potential, ACHR is poised to soar alongside the eVTOL revolution.

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