Archer Aviation (ACHR) has been a hot name among retail investors, fueled by technical and regulatory progress in the development of its aircraft designed for urban air taxis, strong strategic partnerships, and expectations of scale. Nevertheless, the high flier remains heavily dependent on certification milestones, flawless execution, and continued access to cheap capital.
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As a pre-revenue company, the stock’s performance has been mostly driven by news that sparks hopes of accelerating future revenue—which, realistically, is only expected to ramp up meaningfully in a couple of years. While Archer is well-funded and has a solid cash runway for now, I find it hard to believe that dilution won’t be part of the picture to keep its scaling plans running at full throttle.
But make no mistake: this is not a stock for every type of investor. Only those comfortable with high volatility and heavy speculation should be playing this game. At the current valuation, I don’t see a clear risk-reward setup that justifies such bold expectations. In fact, I expect further dilution over the next few months or years to trigger sharper corrections as the hype inevitably cools.
At the same time, even with a higher probability of underperforming the broader market at this price level, going against a hot stock—especially one backed by retail investors—can sometimes be riskier than going along with it, particularly with certification and partnership catalysts still on the horizon. So, ACHR looks like a Hold to me right now.
Why the Bulls Believe in ACHR
In short, Archer Aviation is now an $8.8 billion company that develops electric vertical takeoff and landing aircraft (eVTOLs) designed to serve as urban air taxis. In theory, eVTOLs are much cheaper to operate than helicopters, while also offering scale and efficiency gains that could be tapped into as the business grows.
For Archer’s bullish case, there are three main pillars driving its value higher: (1) FAA certification as the key catalyst that unlocks commercial operations; (2) strategic partnerships and manufacturing scale, allowing the company to ramp up production and secure early customers.
Progressing on FAA Certification
Breaking down the first point, Archer has made solid progress with its Midnight model when it comes to certification. In May last year, the FAA issued the final airworthiness criteria for the Midnight aircraft, allowing Archer to operate commercially starting in June and to formally train pilots since February this year. More recently, in August, the FAA cleared a new set of powered-lift rules, which clarify certification pathways for eVTOLs—good news for companies like Archer.
The next big step is for the FAA to formalize the authorization of “for-credit” flight testing under its Type Inspection Authorization (TIA) stage. Experts expect this phase to take nine to twelve months, noting that Joby Aviation (JOBY), a key peer, has already conducted the first FAA TIA testing of its five-seat eVTOL.
Large and Larger Partnerships Ahead
Looking at the second point, Archer has landed some big partnerships. One standout is United Airlines (UAL), which is working with Archer to build air-taxi networks in urban areas, like New York City, using the Midnight eVTOL. United has already placed 200 provisional orders for the aircraft.
On top of that, Archer has delivered about six aircraft to the U.S. Air Force for testing and evaluation under a $142 million contract, putting the company in a position to tap into military spending on new technologies like autonomous and electric vehicles. Archer is also set to be the exclusive air taxi provider for the 2028 Los Angeles Olympics, which should give its product significant visibility.
There’s also been speculation about a possible partnership with Tesla (TSLA). In early October, Archer posted its Midnight eVTOL on social media alongside the Tesla Optimus robot and a Tesla vehicle, while Tesla teased an enigmatic post featuring its logo and the date “10/7.” The buzz was enough to send ACHR shares up in double digits. However, the event on that date ended up focusing on Tesla’s affordable Model Y and FSD updates, with no sign of any eVTOL partnership—a major letdown for ACHR speculators, as the stock quickly gave back its earlier gains.
Archer Scale Capacity and Financials
The last point I want to raise is about scale. Archer has built a high-volume facility in Georgia, U.S., in partnership with car manufacturer Stellantis (STLA), which has committed $400 million in resources and expertise. The facility aims to produce 650 Midnight aircraft per year.
Given that Archer doesn’t generate revenues yet, ample liquidity is critical. As of June this year, the company reported $1.7 billion in cash and equivalents, with much of it coming from partnership funding and additional equity offerings, though at the cost of some dilution.
Archer’s negative cash flow from operations over the last 12 months is nearly $400 million, which theoretically provides a cash runway of 51 months (or 4.25 years)—assuming the burn rate stays constant. Of course, that’s unlikely, since scaling production will almost certainly increase cash burn.
Analyst projections suggest Archer could reach $1.01 billion in revenue by 2028 and turn a profit in 2029, with estimated EPS around $0.21. Frankly, these targets are highly speculative, given that certification hasn’t reached its final stages, production ramp hasn’t even begun, and market adoption remains uncertain. Even if these targets are met, $1 billion in revenue in four years implies a price-to-sales ratio of 8.7x, which is ambitious and risky for a company at this stage.
Is ACHR a Buy, Hold, or Sell?
Wall Street sentiment on ACHR is super bullish. Over the last three months, six out of seven analysts have recommended Buy, with only one rating it Hold. Still, there’s some caution around the price target, especially given the recent rallies. The average target price sits at $13.14 per share, which would actually imply an upside of almost 9% over the next 12 months.
A High-Flyer Fueled by Hype, but Priced with Little Margin of Safety
Archer is a highly speculative play and not suitable for more risk-averse investors. In my opinion, it’s aggressively priced for optimism, which is unusual for a pre-revenue company. The company has $1.7 billion in cash to fund its plans, but as production ramps up, I expect it will likely need additional equity funding, which could easily weigh on the share price.
There are short- to medium-term catalysts, and the stock is very hot among retail investors, so one could argue for going against the trend and shorting it. That said, in my view, ACHR is a Hold—priced with minimal, if any, margin of safety.