This Aerospace Stock Is Cheap, But Does That Make It a Buy Today?
Key Points
It is hard to place a value on Archer Aviation (NYSE: ACHR) because it is a money-losing start-up. But the stock has fallen more than 60% from its 2025 highs and is now trading at about the same level as in 2021, shortly after coming public via a merger with a special purpose acquisition company (SPAC). Archer Aviation has come a long way since then, so you could easily argue the stock is cheap. But should you buy it?
Archer Aviation has an exciting technology
The big story with Archer Aviation is its electric vertical take-off and landing (eVTOL) aircraft. It already has a model, called Midnight, that it is testing. And it just introduced a variation on Midnight, called Thunder, that is intended for military and industrial use. The hope is that eVTOLs will revolutionize the aerospace industry.
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That’s not a far-fetched idea, since aircraft like Midnight and Thunder can quickly transport people and other items over short distances. Think of an air taxi that allows people to fly over traffic congestion. Or, in the case of Thunder, an unmanned aircraft flying supplies to an oil rig in the middle of the ocean. These are real-world scenarios where Archer’s eVTOL aircraft would be hugely valuable. If you can envision a world where Midnight and Thunder aircraft are zipping through the air, it might be cheap enough for you to buy.
Archer Aviation is getting closer, but it isn’t there yet
There are some problems to consider before you buy that will likely keep all but the most aggressive growth investors on the sidelines. For starters, the company is losing money and will likely continue to do so for a while longer. That’s because it is still working on getting its eVTOL approved for commercial use. And even though Thunder won’t require the same regulatory approvals, it isn’t ready for prime time just yet, either. After the company’s eVTOL aircraft are approved, it will still have to spend significant sums to ramp up production.
Then there’s the not-so-subtle fact that Archer Aviation isn’t the only company working on eVTOL aircraft. The company is far closer to getting into the air than it was when it went public, so management has achieved a huge amount in a short period of time. But it could still get beaten out by the competition if another eVTOL maker has a better product or stronger industry connections.
Don’t rush out and buy Archer Aviation
When you take everything into consideration, Archer Aviation has an attractive but highly uncertain story to tell. And, despite being far cheaper than it was not too long ago, thanks to a deep drawdown, most investors will probably want to hold off until the company’s eVTOL aircraft are approved for commercial use.
Should you buy stock in Archer Aviation right now?
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
