Since last Friday, shares of the electric vertical take-off and landing (eVTOL) aircraft company Archer Aviation (NYSE: ACHR) traded about 15% higher, as of the close of trading on Thursday. The company conducted more successful testing, received positive sentiment from Wall Street, and President Donald Trump’s administration issued executive orders that could benefit Archer.
More progress on testing
Cantor Fitzgerald issued a research note earlier this week, maintaining its overweight rating on the stock and issuing a $13 price target. Analyst Andres Sheppard said the company recently conducted a successful piloted test of its Midnight aircraft. The Midnight reached a cruising speed of 125 miles per hour and an altitude of over 1,500 feet.
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Archer also announced Thursday that it recently completed a piloted transition flight. The company describes this flight as one that “occurs when the aircraft takes off vertically like a helicopter, accelerates forward, transitions from thrust-borne to wing-borne flight like an airplane with tilt propellers forward, before decelerating and landing vertically.”
On Wednesday, the Trump administration also issued several executive orders on drones, flying cars, and supersonics. Specifically, one order creates a pilot program to test eVTOLs for air taxis, cargo, and defense logistics. For Archer to eventually set up air taxis for commercial use, it will need regulators to sign off, so the Trump administration’s support is a good sign.
Compelling and expensive
Archer has shown tremendous promise. Not only has its Midnight aircraft achieved many regulatory and operational milestones, but the company has also secured contracts with the Department of Defense through its partnership with Anduril.
If commercial air taxis becomes a massive new sector, Archer will likely be one of the few companies that can quickly gobble up market share. However, the company is not yet profitable and already trades at a $6.4 billion market cap, making it tough to go all in just yet. I would start with a smaller, speculative position and build it as Archer achieves regulatory milestones and other big accomplishments.
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Bram Berkowitz 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.
