Could This Cathie Wood EV Stock Be the Next Tesla?

As an investor, you're always on the lookout for the next big thing. Cathie Wood, CEO of ARK Investment Management, has a knack for finding them. Her early bet on Tesla (TSLA) paid off handsomely, and now she's got her eyes on another electric vehicle (EV) stock: Archer Aviation (ACHR). But is this EV stock the next Tesla? Let's dive in and find out.



Archer has a lot of exciting opportunities. The company manufactures battery-powered aircraft, aiming to complement mobility in densely populated areas. It has attracted strategic investors like Stellantis and United Airlines, as well as interest from the U.S. military. With a deal book in excess of $6 billion, it's clear that demand for Archer's aircraft is very real.



Comparing Archer's valuation to Tesla's, you might think it's a steal. Right now, you can buy shares of Archer for roughly $10, while Tesla's stock price is significantly higher. However, it's essential to remember that Archer is still a pre-revenue business. While I believe the company is on the right path with regulators, it's going to be years before Archer reaches any form of critical scale.



Until then, Archer will likely burn cash required for research and development (R&D) and capital expenditures (capex). Tesla went through a similar phase, but it took years of relentless investment in innovation before it reached the commercial scale required to produce a premium vehicle and sell it for a considerable profit margin.



Tesla's overall business has more dimensions than that of Archer. Beyond EVs, it also produces energy storage packs and is investing heavily in artificial intelligence (AI) -- primarily in the form of autonomous vehicle software and humanoid robotics. CEO Elon Musk has been talking about his AI ambitions for years, well before the technology became the newest megatrend. Wood bought into Musk's vision a long time ago, and today, she's reaping the rewards financially as Tesla's progress from AI is becoming increasingly apparent.



Until Archer Aviation can prove that its aircraft represent a growing opportunity, it's pure speculation that the company will branch into other opportunities and witness success there, too. For all of these reasons, I see Archer as an intriguing business, but not one that carries the same level of upside that Tesla does.

In conclusion, while Archer Aviation has a lot of exciting opportunities and a lower valuation compared to Tesla, it's still a pre-revenue business with a long road ahead. As an investor, you should be cautious and do your due diligence before making any decisions. Keep an eye on Archer, but don't expect it to be the next Tesla overnight.