Alongside AI stocks, flying car stocks have also been trending with investors lately. With this in mind, it’s no surprise that Archer Aviation (NYSE:ACHR) shares have performed very well over the past six months. Since March, ACHR stock has more than doubled in price.
During this time frame, ACHR’s performance has topped that of other high-profile names in this space, like EHang Holdings (NASDAQ:EH). Admittedly, there’s a big reason this electric vertical takeoff and landing play has become especially hot among investors.
This pre-revenue company has attracted several big name backers, including a prominent growth investor. However, that’s not the only thing Archer has going for it. Other developments suggest that the company is a top contender in this fast-growing space.
So, with more than just famous names in its corner, let’s dive in, and see whether now’s the time to hop aboard.
Big Time Gains and Big Time Backers
Founded in 2018, Archer Aviation is not that old. However, this hasn’t stopped the startup from gaining significant financial backing from established names in transportations. So far, Archer has secured equity investments from Boeing (NYSE:BA), Stellantis (NYSE:STLA), and United Airlines (NASDAQ:UAL).
Alongside these industrial heavyweights, Cathie Wood’s ARK Investment Management is also another major backer.
Not only that, as InvestorPlace’s Chris MacDonald discussed Sep. 21, the prominent growth investing firm has added to its ACHR stock position, through open market purchases made by ARK’s flagship Ark Innovation ETF (NYSEARCA:ARKK).
As mentioned above, these recent investments have likely contributed to the stock’s convincing performance recently, with shares really going on a tear during July and August. However, so far this month, Archer has pulled back.
At first, you may think this is because of investors calming down, after getting hyped up about the big names backing this company.
Yet it’s clear something else has driven ACHR’s big time gains. Besides the fact investors have realized the growth potential with the eVTOL industry, Archer has clearly made major commercialization progress as well.
More Than Just Flying Taxis
Check out coverage of ACHR stock, and you’ll see plenty of articles describing Archer as a “flying taxi” company. By-and-large, this is an apt descriptor.
Right now, the company’s main focus is on obtaining the regulatory approval from the Federal Aviation Administration (or FAA), in order to begin commercial operations by 2025.
Now, Archer isn’t looking to operate “flying taxis” itself. Rather, strategic partner United Airlines has committed to purchasing 100 of Archer’s aircraft, for a planned air taxi shuttle service. Success with this venture could lead to other big ticket deals with urban air mobility operators.
However, besides selling aircraft like its flagship Midnight eVTOL to commercial end-users, Archer is getting into the defense end of the aviation industry as well.
After several years of working with the U.S. Department of Defense on several projects, in July the company was awarded several U.S. Air Force contracts, worth up to $142 million.
While it’s too early to say for sure, in time, if eVTOLs become widely used by the U.S. military, along with perhaps one day becoming a major flying taxi manufacturer, Archer could also become a major supplier of military aircraft.
The Verdict
If you have a long time horizon, near-term volatility may not necessarily be a deal breaker. Those a bit more cautious may want to put it on their watchlists, in event shares give back more of their recent gains.
Although this company is richly-valued ($1.41 billion market cap) compared to its current results, with big-ticket customers like United Airlines and the U.S. military already lined up, it may not take much in terms of monetization to sustain and add to Archer’s valuation.
With flying cars slated to grow into a trillion dollar industry in the coming decades, even a modicum of success in this burgeoning field could lead to further rounds of significant gains for ACHR stock.
ACHR stock earns a B rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
