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Is Archer Aviation Stock a Buy Below $9?

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  • Archer Aviation is still in pre-production for the eVTOLs it plans to sell.

  • It is burning a lot of cash and diluting shareholders with equity raises.

  • The stock looks risky and overvalued at today’s market cap of $5 billion.

  • 10 stocks we like better than Archer Aviation ›

Electric vertical takeoff taxis (eVTOLs) are a potentially disruptive technology on the verge of going commercial. Many publicly traded stocks are vying to win this race and bring eVTOLs to the masses, including Archer Aviation (NYSE: ACHR). The start-up has built up a sizable backlog, has begun manufacturing vehicles for regulatory certification, and has a new partnership for the defense sector.

Today, Archer Aviation trades at a cheap-looking price below $9 a share. It is aiming to get its vehicles flying by the end of 2025 with the hopes of disrupting the transportation sector and alleviating traffic in major cities. Does that mean you should you buy the stock today?

The eVTOL products from Archer Aviation promise to reduce traffic and travel times through key corridors in major cities. The air taxis — which carry four people and are operated by a pilot — will travel from point-to-point terminals similar to a helicopter but with much less noisy operations. For example, the company plans to fly a route from downtown Manhattan to the Newark Airport, which would cut travel time from around an hour to under 10 minutes.

This valuable technology has many partners coming to the table to place orders for Archer Aviation’s Midnight vehicle, costing around $5 million apiece. Archer Aviation now has a backlog of around $6 billion, which are commitments from customers to purchase these vehicles. Globally, many cities are lining up to use these products, with Abu Dhabi being the first city planning to try out the service.

Archer Aviation has some potentially disruptive technology, but it is still in the early days of manufacturing. It plans to build 10 Midnight aircraft in 2025 at its Georgia facility, most of which will likely be for testing and certifications with the Federal Aviation Administration (FAA). The company still needs full regulatory approval to operate its eVTOLs (or have other companies operate them) in the United States, which it hopes to have by the end of this year.

An eVTOL.
Image source: Getty Images.

Since it hasn’t sold its product to customers yet, Archer Aviation generates zero revenue at the moment. If it sold all 10 of the aircraft produced in 2025, it would have a measly $50 million in revenue at a $5 million-per-vehicle selling price, which is tiny compared to its market cap of $5 billion. The company is burning $451 million in free cash flow a year, which is going to eat rapidly into its cash and liquidity position that totals around $1 billion.

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