Archer Aviation: Can Strategic Alliances and FAA Progress Overcome Culper’s Short Bet?

Archer Aviation (NASDAQ: AHR) stands at a critical juncture. The eVTOL pioneer is navigating dual pressures: Culper Research’s scathing short report alleging fraud and operational instability, and the looming FAA certification process for its Midnight aircraft. Yet, beneath the noise, Archer’s progress with strategic partners, flight test milestones, and capital management suggests a compelling risk-reward profile for investors willing to look past near-term volatility.

Technical Risks: Culper’s Claims vs. Ground Reality

Culper Research’s February 2025 report targeted Archer’s credibility, citing delayed ground tests, incomplete aircraft assembly, and alleged discrepancies in FAA certification timelines. The firm argued that Archer’s “full transition flight” milestone—announced in June 2024—lacked credible evidence, while internal emails suggested the company was “falsifying timelines.”

However, Archer has methodically addressed these claims. By Q1 2025, it had:
- Completed over 400 test flights in 2024, with ongoing “for credit” tests to accelerate FAA certification.
- Advanced to Phase 4 of the FAA’s four-phase type certification process, with the powered-lift SFAR finalized to align regulatory requirements.
- Commenced assembly of its first conforming Midnight aircraft at its Georgia facility, targeting a production rate of two aircraft/month by late 2025.

Shares fell to $7.50 in the wake of the report but stabilized as Archer provided incremental flight test updates, underscoring investor skepticism but also resilience.

Strategic Partnerships: The Counterweight to Skepticism

Archer’s alliances with industry giants provide a bulwark against technical risks:

1. Palantir’s AI-Driven Manufacturing:
   Archer’s $10M collaboration with Palantir aims to optimize production workflows using AI, reducing costs and scaling efficiently. This partnership directly addresses Culper’s concerns about manufacturing delays, as Palantir’s tools have slashed defect rates in automotive and aerospace sectors.

2. United Airlines’ NYC Air Taxi Network:
   Archer’s Midnight aircraft is slated to launch a NYC-to-airport service in 2026, contingent on FAA certification. United’s backing adds credibility to Archer’s commercial viability, with a $500M order from Japan’s Soracle (JAL-Sumitomo JV) further validating demand.

3. UAE’s Strategic Bet:
   Archer’s first Midnight aircraft delivery to the UAE by summer 2025, paired with a $200M partnership for vertiports and pilot training, underscores geopolitical momentum. Abu Dhabi’s 2PointZero collaboration ensures a real-world testbed for Midnight’s reliability.

Flight Test Timelines and FAA Milestones

Archer’s flight test program is on track to meet critical deadlines:
- Q3 2025: Finalize FAA type certification after completing high-speed ground tests and final aircraft assembly.
- Q4 2025: Begin revenue flights in the UAE, with Japan following in early 2026.

Despite a $109M Q1 2025 loss, Archer retains $1.03B in cash—enough to fund operations through 2026. The $400M infusion from Stellantis (pending shareholder approval) would extend liquidity further, easing concerns about dilution.

Demand Potential: E-VTOLs Are Not a Fad

Culper’s bear case hinges on skepticism about urban air mobility’s adoption. Yet, the economics are compelling:
- Cost: Midnight’s projected $0.50/seat-mile compares favorably to $1.20 for helicopters.
- Regulatory Tailwinds: The FAA’s SFAR and global vertiport investments (e.g., UAE’s $1.5B fund) validate the market’s viability.
- Environmental Incentives: E-VTOLs emit 75% less CO₂ per passenger-mile than traditional aircraft, aligning with corporate ESG goals.

Investment Thesis: Buy the Dip Below $10

Archer’s stock trades at $8.25 as of May 2025—a 30% discount to its 52-week high. This price reflects near-term risks but ignores the company’s tangible progress:
- Certification Catalyst: A positive FAA type certification by late 2025 could trigger a 50%+ rally.
- Partnership Pipeline: Soracle’s $500M order and UAE’s first flights create recurring revenue streams.

At a 5x sales multiple (vs. Joby’s 8x), Archer offers asymmetric upside if certification is secured.

Conclusion: A High-Reward, High-Risk Play

Archer Aviation is a bet on two variables: FAA certification execution and partner credibility. Culper’s claims are valid in highlighting operational risks, but the company’s progress with flight tests, manufacturing, and alliances suggests it can overcome these hurdles. For investors willing to accept volatility, a 5% allocation at $10 or below could yield outsized returns if the Midnight aircraft achieves commercial scale. The eVTOL race is far from over—and Archer is still in it to win it.

Actionable Idea: Accumulate shares at $9.50–$10, with a 6–12 month horizon. Set a stop-loss at $7.50 and target $15–$20 if certification is secured.