Buying Archer Aviation Stock? You’ll Be Grounded for a While
After a strong summer, Archer Aviation (NYSE:ACHR) stock lost altitude in September.
Does this mean it’s time for investors to give up on Archer Aviation? Not necessarily, but you’ll definitely want to keep your share position size small and be realistic with your time frame.
Archer Aviation will not commercialize its electric vertical take-off and landing aircraft technology next week or even next month. Nevertheless, the sky’s the limit for Archer Aviation as the company has some famous financial backers.
Archer Aviation’s Big-Money Investors
It’s easy to see why ACHR stock flew high this summer. This was the hype phase, when financial traders envisioned Archer Aviation’s flying taxis populating the skies.
August was an exciting month for Archer Aviation and its stakeholders. The company announced investments from well-known firms, including Boeing (NYSE:BA), Stellantis (NYSE:STLA) and United Airlines (NASDAQ:UAL).
Boeing and Archer Aviation settled their legal issues and “entered a partnership relating to autonomous flight,” in August, according to MarketWatch.
Archer Aviation also revealed that Cathie Wood’s company, ARK Investment Management, took a financial stake in the eVTOL aircraft technology company. All told, the funding from the aforementioned firms exceeded $1.1 billion.
In early September, it was reported that ARK Investment Management had added to its stake in Archer Aviation.
Why ACHR Stock Won’t Fly Higher in 2023
These are exciting developments, but let’s not get ahead of ourselves. The $1.1 billion in funding should support Archer Aviation’s “path to” Federal Aviation Administration “certification and commercial operations in 2025.”
The FAA did already approve Archer Aviation’s Midnight eVTOL aircraft for test-flight operations. That’s just an early step toward full commercialization, however.
The point is, don’t expect Archer Aviation to rake in massive revenue or profits in 2023 or early 2024.
Recently, Archer Aviation CEO Adam Goldstein and Chief Safety Officer Billy Nolen publicly discussed “Archer and the larger eVTOL aircraft industry’s progress toward the goal of beginning commercial operations in 2025 and reaching scaled operations by 2028.”
So, again, ACHR stock investors should think in terms of years, not months. The eVTOL aircraft industry is still in its infancy, and there are still regulatory hurdles to clear. Along the way, there will be safety concerns and, probably, some unfortunate mishaps.
That’s to be expected with new flight technology. But then, Wood and the other backers are forward-thinking investors.
They’re undoubtedly interested in what Archer Aviation will achieve down the road. They’ve surely conducted their due diligence on Archer Aviation; otherwise, they wouldn’t have invested hundreds of millions of dollars in the company.
ACHR Stock Traders: Start Small and Just Relax
Is the eVTOL aircraft industry a fad and a fantasy, or is it here to stay for the long haul? I believe Archer Aviation is an early contender in a potential hyper-growth market. Hence, I like Archer Aviation’s long-term future prospects.
Boeing, Wood and other backers seem to agree. Still, this is an industry that is in its early stages, so there are risks involved and patience will be required.
Even if you have a positive outlook on Archer Aviation, the best strategy is to take a very small share position in ACHR stock. Then, be prepared to hold your shares for years as the runway to profits could be quite lengthy.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
