Could Buying Archer Aviation Stock Today Set You Up for Life?

Archer Aviation (ACHR -1.35%) is an ambitious developer of electric vertical takeoff and landing (eVTOL) aircraft, also known as "flying taxis." Its flagship eVTOL craft -- Midnight -- is like a cross between a drone and a helicopter, and it could one day carry up to four passengers over traffic.

Archer has yet to certify its eVTOLs, and its stock value is a reflection of that: After flirting with a double-digit value last October, Archer's stock now trades at about $5 a share. With a market cap of $4 billion, could this be an opportunity to set you up for life, or is it a high-flying trap concealing enormous risk?

Image source: Archer Aviation.

The bull case for Archer rests on the fact that it no longer relies on a single narrative. Yes, it is still building -- or, rather, attempting to certify -- eVTOLs for urban mobility. But in addition to these pedestrian aims, it is also co-developing an autonomous VTOL aircraft platform with the defense company Anduril, which could open a revenue stream much sooner than passenger flights would.

Let's break the deal down. The announcement, which broke on July 20, showcased a new autonomous defense aircraft, "Thunder," which can bolster crewed aircraft to multiply combat power. Better yet, the VTOL aircraft could move forward without the same FAA certification requirements as the "civilian" Midnight. It will still require extensive testing and airworthiness approval, but its path to deployment could be faster than Midnight's.

Still, even with expanded military customers, Archer can't ignore a gaping hole in its young business: Midnight still lacks FAA type certification.

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Current Price

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Timelines for acquiring this required certification have slipped several times, and Archer now says it is aiming to certify its air taxis by the 2028 Olympics in Los Angeles. Given that Archer was also named the official air taxi provider for the Olympics, it will be quite the magic trick if it manages to manufacture and deliver a sufficient number of aircraft to service the Olympics in the same year it receives certification.

Archer is, of course, participating in a White House-backed program that aims to accelerate the deployment of eVTOLs in American cities in these "pre-certification" times. Whether this will actually fast-track the adoption of eVTOLs -- or lay the groundwork for infrastructure -- remains to be seen, but Archer, which has produced only a handful of Midnights to date, will certainly need to kick production into high gear regardless.

If Archer and Anduril land a major commercial client in the upcoming weeks, with meaningful revenue attached, this stock could soar.

But don't confuse potential demand with a proven business model. Archer is still burning cash, Midnight is uncertified, and large-scale manufacturing of aircraft hasn't been shown. Even a major contract could take years to materialize in bottom- and top-line growth.

For now, I would continue to treat Archer as a speculative stock. The upside could be life-changing, but with so many pieces unproven, this is a stock for risk-tolerant investors who can afford to be patient -- or wrong.