Shares of Archer Aviation (NYSE: ACHR) fell this week. The company’s stock lost 20.7% as of 1:58 p.m. ET on Friday. The loss comes as the S&P 500 (SNPINDEX: ^GSPC) fell 2.1% and the Nasdaq-100 lost 2%.
Archer Aviation, which develops electric vertical takeoff and landing (eVTOL) aircraft, was the target of a damning investigative report from short-seller Culper Research.
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Allegations of fraud
The report, released early this week, alleges that Archer has systematically misled investors, making false statements about its aircraft’s abilities and development timeline in order to meet funding milestones. The report also claims that while this is happening behind the scenes, the company is spending millions promoting itself on late-night TV and buying the rights to be the official air taxi service at the upcoming LA Olympics in 2028.
In response, Archer said: “Culper is not a credible research institution. Archer has attracted significant attention due to its recent momentum and positive high-profile news. His claims are baseless.”
Image source: Getty Images.
The allegations are damning, but the short-seller has a clear motive
It’s critical to keep a level head when a report like this is released. Remember that Culper has a significant financial stake in seeing Archer’s stock decline. That is not to say I think they are false, but just to take them with a grain of salt and wait for more information.
With that being said, if the allegations are true, it would mean Archer is much further from commercialization than it claims — if it ever reaches it. That’s a problem.
Unfortunately, we just don’t have all the information at this point. Hopefully, Archer will address the core of these allegations and put them to rest. I wouldn’t sell if you hold Archer, but I might hold off on buying shares until more information comes to light.
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Johnny Rice 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.
