Archer Aviation Inc: Wall Street Thinks This EV Stock Has 150% Upside

Man hand with money on blue sky cloud background.

Why ACHR Stock Is Intriguing

When it comes to electric vehicle (EV) stocks, most investors focus on companies that make vehicles of the four-wheeled variety. But instead of looking forward, EV stock investors might want to look up (to the sky).

Every day in the U.S., people make more than 1.1 billion trips covering 11 billion miles. The vast majority of them (87%) take place in personal vehicles.

With congested roads, Americans waste approximately one hour per day stuck in traffic. Add it up and each year, the average American spends about two glorious weeks enjoying bumper-to-bumper traffic. (Source: “Archer Shareholder Letter: Q3 2021,” Archer Aviation Inc, last accessed December 3, 2021.)

Traditional EVs aren’t going to help with that congestion, but urban air mobility (UAM) vehicles could.

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While most people might think of UAMs as something from The Jetsons that won’t become widely used, history is not on their side. Case in point: trains, planes, and automobiles only became widely used over the last 170 years. Before that, we used horses and buggies.

In less than two centuries, we went from Little House on The Prairie to The Fast and Furious.

And that pace of technological advancement is getting shorter. Just 22 years after the first Model T was introduced in 1908, 23 million cars were on American roads, with more than half of American families owning a car.

The adoption of UAMs could be just as inevitable. At least Wall Street seems to think so: Morgan Stanley (NYSE:MS) predicts that UAMs will be a $1.0-trillion market by 2040 and a $9.0-trillion market by 2050.

One company that’s poised to take advantage of the UAM market is Archer Aviation Inc (NYSE:ACHR). The company designs—and will eventually manufacture and operate—electric vertical take-off and landing (eVTOL) aircraft for carrying passengers.

Archer Aviation stock only went public in September. Early private investors in Archer Aviation included United Airlines Holdings Inc (NASDAQ:UAL), Stellantis NV (NYSE:STLA), Baron Capital, and the venture arm of Exor NV (FRA:EYX, OTCMKTS:EXXRF).

Archer Aviation Inc has a commercial partnership with United Airlines for up to $1.5 billion in aircraft sales and go-to-market operating support.

The company also has a strategic manufacturing and supply chain partnership with Stellantis, the company behind the “Alfa Romeo,” “Chrysler,” “Citroen,” “Dodge,” “Fiat,” “Jeep,” “Maserati,” and “Ram” brands.

Moreover, Archer Aviation has support from the Los Angeles and Miami governments to facilitate the build-out of UAM infrastructure.

In coordination with the Los Angeles Mayor’s office, Archer Aviation Inc will be launching an initial UAM network. The company estimates that, at maturity, a fleet of 300 vehicles operating across a single network could generate annual revenue of $500.0 million.

Archer Aviation Inc has also been working with REEF Technology Inc, the largest parking garage operator in North America, covering 70% of the urban population. Upgrading the tops of REEF’s 4,800 parking garages with charging infrastructure would take minimal effort. The facilities are centrally located, minimizing last-mile trip time.

And there’s more to Archer Aviation Inc than targeting commuters who travel 50 miles or less. The company is also looking to capitalize on the “micro explorer” market.

That market comprises individuals who want to take trips that would otherwise be inaccessible or take too long via ground transportation. The micro explorer category is comparable to how much travel increased once people could use cars instead of horses and buggies.

Archer Aviation Inc Preparing for its First eVTOL Flight

Archer Aviation Inc unveiled its eVTOL aircraft “Maker” in June and recently relocated it from the development lab to the flight test facility. (Source: Ibid.)

That’s a big deal in the world of aviation.

The electric-powered aircraft has six independent battery packs and 12 electric motors. The Maker will cruise 2,000 feet above the ground and be virtually silent to people on the ground. It will be able to carry up to four passengers.

Archer Aviation Inc reached a key milestone on the path to certification for the Maker, with a signed G-1 Issue Paper with the Federal Aviation Administration (FAA) in September. That established the airworthiness and environmental requirements necessary for full Type Certification.

Since then, the FAA has also issued its Certificate of Authorization and Aircraft Limitations for the Maker. These are key components of the Special Airworthiness Certificate, which permits the aircraft to begin test flights. (Source: “Ahead of First Hover Flight, Maker Aircraft Receives FAA COA and Relocates From Development Lab to Flight Test Facility,” Archer Aviation Inc, November 10, 2021.)

“The relocation of Maker to our dedicated flight test facility marks the next chapter in our journey towards the future of flight,” said Brett Adcock, co-founder and co-CEO of Archer Aviation. (Source: Ibid.)

“This transition will allow our team to shift gears from our ‘ground phase’ to the ‘flight phase’ of our Maker roadmap.”

The first test flight is planned for December. After that, Archer Aviation Inc will perform progressively more advanced test flights throughout 2022, with the goals of a first cruise flight in the second half of 2022 and commercial operations in 2024.

Share-Price Forecast

Archer Aviation Inc doesn’t expect to unveil the first generation of its production aircraft until 2023. That doesn’t mean ACHR stock isn’t going to do anything until then. Like the stock of any development-stage company, its price will move on positive developments and setbacks.

Chart courtesy of StockCharts.com

Wall Street is upbeat about Archer Aviation stock’s near- and long-term outlook.

Of the analysts providing a 12-month share-price forecast for Archer Aviation Inc, their average estimate is $12.50 and their high estimate is $15.00. That points to potential upside of 107% and 148%, respectively.

That should be welcome news to ACHR stock investors, who have seen their shares tumble by roughly 40% since Archer Aviation stock went public.

Analyst Take

While Archer Aviation Inc has accomplished a lot in 2021, it still has key challenges and critical milestones ahead of it on its path to commercialization. Hitting those milestones will be vital for the success of Archer Aviation and its share price.

Although full production of its first eVTOL aircraft is still a few years away, optimism about the company’s prospects could propel ACHR stock significantly higher over the coming quarters.