Archer Aviation: Navigating Legal Turmoil and a Shifting eVTOL Landscape—Is the Stock a Long-Term Buy?

The electric vertical takeoff and landing (eVTOL) sector, once hailed as the future of urban mobility, has entered a period of reckoning. For Archer Aviation (ACHR), the challenges are both existential and immediate. A shareholder lawsuit alleging misrepresentation during its 2021 SPAC merger, a short-seller report questioning its progress, and a faltering partnership with Stellantis have sent its stock plummeting by over 10% in a single session. Yet, beneath the noise, the eVTOL market remains on track for explosive growth. The question for investors is whether Archer's current woes are a temporary storm or a sign of deeper structural flaws in its business model.

Legal Headwinds and Investor Sentiment

Archer's legal troubles began in earnest in 2025 when the Delaware Chancery Court greenlit a lawsuit accusing the company and its SPAC partners of inflating share values and development timelines. The ruling added fuel to a short-seller report from Culper Research, which claimed Archer had overstated its progress on the Midnight aircraft. While Archer has pushed back aggressively, the combined blow eroded trust in a sector already prone to skepticism.

The fallout was swift. ACHR's stock, which had traded near $15 in early 2025, dipped to $11.85 by mid-July—a 10.84% drop in a single day. The legal proceedings, while not yet resolved, have forced management to divert resources from core operations, raising concerns about execution risk. Yet, as one analyst notes, “eVTOL lawsuits often end in settlements with minimal long-term impact. The real test is whether Archer can stay focused on its commercial goals while managing this distraction.”

A Market on the Brink of Takeoff

Despite Archer's turbulence, the eVTOL sector is far from dead. The global market is projected to grow at a 29.65% CAGR, surging from $1.19 billion in 2025 to $4.36 billion by 2030. Regulatory clarity, particularly in the U.S. and Asia-Pacific, is accelerating adoption. The FAA's 2024 Special Federal Aviation Regulation No. 120 has streamlined certification processes, while the UAE's aggressive push for air taxi services by 2026 offers a near-term revenue runway.

Archer's strategic partnerships, including a $1 billion order from United Airlines for 200 Midnight aircraft, position it to benefit from this growth. Its $1.04 billion in cash reserves, bolstered by a $850 million capital raise, provide a buffer against near-term liquidity risks. However, the company's adjusted EBITDA loss of $109 million in Q1 2025 underscores the capital-intensive nature of its mission.

Competitive Pressures and Strategic Risks

Archer's lean model—outsourcing manufacturing to Stellantis—has been both a strength and a vulnerability. While it reduces upfront costs, Stellantis' recent $2.68 billion loss and pivot away from hydrogen fuel cell technology have raised red flags. If Stellantis scales back support, Archer's production timelines could slip, further delaying revenue.

Meanwhile, competitors like Joby Aviation (JOBY) are gaining traction. Joby recently completed FAA certification stages and secured a $250 million investment from Toyota. Its vertically integrated approach, though more capital-intensive, offers greater control over supply chains and timelines. Archer's hybrid-electric design may carve a niche, but it must prove it can outperform rivals in cost efficiency and regulatory compliance.

The Long-Term Outlook: A Calculated Bet

For investors, the key variables are regulatory approval, production scaling, and market adoption. Archer's path to FAA Type Certification remains a critical inflection point. Delays could push commercial operations to 2027, allowing competitors to capture early-mover advantage. However, the company's $2 billion cash runway provides time to address these challenges.

Archer's long-term value also hinges on its ability to convert pre-orders into revenue. While its 1,500 pre-orders for the Midnight are promising, they are non-binding—a reality shared by all eVTOL players. The company must demonstrate not just technical feasibility but also operational reliability to attract customers and investors.

Investment Thesis: Proceed with Caution

Archer's stock is a high-risk, high-reward proposition. The legal and regulatory risks are significant, and the eVTOL sector remains unproven. However, the company's strong cash position, strategic partnerships, and a growing market could justify a long-term position for risk-tolerant investors.

Recommendations for Investors:
1. Wait for Key Milestones: Monitor Archer's progress on FAA certification and production scaling. A successful commercial launch in the UAE by late 2025 could reignite investor confidence.
2. Diversify Exposure: Consider pairing ACHR with more established players like Joby Aviation to balance risk.
3. Watch for Legal Resolutions: A favorable outcome in the Delaware lawsuit would likely stabilize the stock, while a settlement could provide clarity.

In the end, Archer Aviation represents the classic “moonshot” play: a company with transformative potential but vulnerable to execution risks. For those with a multi-year horizon and a tolerance for volatility, it may still hold value—provided the company can navigate its current crossroads.