Archer's eVTOL Fever: Reddit Frenzy and Volatile Gains

Archer Aviation's (ACHR) eVTOL aircraft, Midnight, has sparked a Reddit frenzy, with the company's stock soaring despite volatile price swings. The developer of electric vertical takeoff and landing (eVTOL) aircraft has seen its share price increase by 17% over the past month, but the stock remains down 35% for the year. The frenzy has been fueled by the potential of eVTOL technology and the growing interest in urban air mobility (UAM).

Archer's Midnight aircraft has a maximum speed of 150 miles per hour, a max range of 100 miles, and can carry a single pilot and four passengers. These electric aircraft are cheaper, cleaner, quieter, and easier to land in urban areas than helicopters, making them well-suited for short-range air taxi services. Archer has secured significant deals with United Airlines, Stellantis, the U.S. Air Force, and Future Flight Global, totaling $6 billion in preliminary orders.

Analysts at Needham initiated coverage on Archer Aviation in November 2024, giving the stock a "buy" rating and setting a one-year price target of $11 per share. The firm's lead analyst, Chris Pierce, believes the still-nascent flying-taxi industry is taking off and that Archer can recognize more than $3 billion of its orders within the near future. With Archer's market cap sitting at roughly $2.1 billion, the stock could prove significantly undervalued at current prices if Needham's sales growth forecast plays out as anticipated.

However, Archer is still in the early stages of long-term expansion initiatives and is in a pre-revenue state. The company is expected to generate less than $1 million in revenue in 2024, with a net loss of $467 million. Archer's enterprise value of $1.43 billion translates to a valuation of over 2,000 times the company's sales estimate.

As Archer works to secure regulatory approvals in key geographic markets, its share price could see big gains above current pricing levels. However, investors should be aware that significant risks remain, and Archer may face valuation pressures if short sellers continue to place big bets against the stock.

In summary, Archer Aviation's eVTOL boom has sparked a Reddit frenzy, with the company's stock soaring despite volatile price swings. While Archer faces challenges in scaling its business and generating meaningful cash flows, its potential in the urban air mobility market remains significant. Investors should approach Archer Aviation with a high-risk, high-reward mindset, understanding the speculative nature of the stock and the need for operational and financial success.

Analysts' price targets and stock performance for Archer Aviation