Archer Aviation: Flying High on Certifications or Grounded by Reality?

Archer Aviation (ACHR) stands at a critical juncture. The eVTOL pioneer has made strides toward commercializing its Midnight aircraft, with FAA certifications advancing and partnerships solidifying. Yet, the path to profitability remains fraught with regulatory, competitive, and operational hurdles. Is Archer's stock a compelling buy now, or does it risk overpromising on a market still years from maturity?

Near-Term Catalysts: Certifications and First Revenue

Archer's progress in 2025 has been marked by tangible milestones. The company has secured Part 135, 141, and 145 FAA certifications, positioning it to begin pilot training, maintenance services, and—critically—revenue generation. Its UAE “Launch Edition” deal, valued at over $20 million, represents the first commercial contract for the Midnight aircraft, independent of U.S. regulatory timelines. This agreement includes two aircraft deliveries, infrastructure support, and pilot training, a margin-positive win that underscores Archer's ability to monetize its technology early.

Meanwhile, Archer's defense division is advancing a hybrid-electric military VTOL project with Anduril, a non-U.S.-certification-dependent revenue stream. Combined with a $142 million Air Force contract, these deals diversify its income and de-risk reliance on FAA approvals.

The company's cash position has also improved, reaching $1.03 billion as of Q1 2025, bolstered by equity raises and construction loans. This liquidity, plus a pending $400 million commitment from Stellantis, provides a 12-month cash runway, easing near-term funding pressures.

Long-Term Viability: Regulatory Risks and Competitive Realities

Despite progress, Archer faces daunting challenges. The FAA Type Certification, critical for U.S. commercial operations, remains pending, with a late-2025 target. Delays here could push revenue timelines into 2027, risking investor patience.

The eVTOL sector is also crowded. Competitors like Joby Aviation (JOBY) and Wisk (WISK) are advancing certification efforts, while traditional aerospace giants (e.g., Boeing, Airbus) could enter the space. Archer's $6 billion order backlog—largely from United Airlines (UAL) and Future Flight Global—must be defended in this intensifying race.

Scalability is another hurdle. Archer's Georgia manufacturing facility aims to produce 650 Midnight aircraft annually by 2030, but cost efficiency and supply chain reliability remain unproven at scale. The Stellantis partnership, if finalized, could alleviate some risks, but its delay has already caused concern.

Valuation: Overhype or Undervalued Innovation?

Archer's current valuation (assuming ~334 million shares outstanding as of September 2024 and a June 2025 stock price of $5.15) implies a market cap of ~$1.7 billion, far below its $6 billion order backlog. Analysts project a $10 price target by 2034, suggesting a 10-year upside of 95%.

However, Archer's cash burn—$93 million in Q1 2025—remains elevated, and its accumulated deficit exceeds $1.4 billion. The stock's volatility (down 30% year-to-date as of June 2025) reflects skepticism about execution risks.

Investment Thesis: High Risk, High Reward

Bull Case: Archer's UAE revenue stream, defense contracts, and potential Stellantis funding create a self-sustaining path toward profitability. If FAA certification is secured by late 2025 and U.S. operations with United begin in 2026, the stock could surge, especially in a sector poised to hit a $1 trillion market cap by 2040.

Bear Case: Delays in certification, competition, or a failure to secure Stellantis's capital could force Archer to dilute shareholders further. The eVTOL market's timeline—still years from mass adoption—adds uncertainty.

Final Analysis

Archer Aviation presents a compelling long-term bet for investors willing to tolerate high volatility and execution risks. Near-term catalysts like the UAE launch and FAA certification progress justify cautious optimism, but the stock's success hinges on overcoming regulatory and operational headwinds. For now, hold or accumulate only if you can stomach downside risk—this is a “swing-for-the-fences” play on urban air mobility.

Investment Grade: B+ (High Risk, High Reward)
Hold Until: Late 2025 FAA certification decision; Stellantis agreement finalized.
Target: $10 by 2034 (long-term); $5.15–$8 near-term.

Final Note: Urban air mobility's promise is undeniable, but Archer must prove it can navigate the stormy skies of execution before investors can safely board.