The company has hit some key milestones with its Midnight aircraft.
Picture this: You’re stuck in endless traffic, taking what feels like an eternity to reach your destination. Now, imagine pulling off the highway, parking your car, and summoning an Uber — but the vehicle that arrives is not a car, but a drone-like aircraft that swiftly whisks you away to your destination.
Such futuristic flying taxis, also referred to as electric vertical takeoff and landing (eVTOL) aircraft, have been developed and are currently being tested — and could come to a city near you soon. Archer Aviation (ACHR -0.33%), with its cutting-edge Midnight aircraft, is among the companies pioneering this innovative mode of transportation.
The company is making significant progress, and it eagerly anticipates regulatory approval to proceed with commercial operations. This development has sparked excitement about the future of transportation, and investors may be wondering: Could buying Archer Aviation today eventually make me a millionaire?
Image source: Archer Aviation.
Archer Aviation is making meaningful progress
Archer Aviation is one of a few companies developing eVTOL technology that could change urban transportation as we know it. Its Midnight aircraft can maneuver similarly to a helicopter, but also fly using their wings to supply lift like traditional planes. And unlike helicopters, eVTOLs use electric motors, which make them an efficient, quieter mode of transportation suitable for urban travel.
In June, the company completed a transition flight of its Midnight vehicle. During this flight, the vehicle took off vertically, accelerated forward, transitioned from thrust-borne flight to wing-borne flight like an aircraft, and then decelerated and landed vertically. This successful test was an important milestone that validated the concept and operability of the craft.
Archer still has work to do to reach commercial operations. First, Midnight needs to receive its Type Certification from the Federal Aviation Administration (FAA), which it expects in late 2025. That would pave the way for it to launch commercial operations.
It recently signed a memorandum of understanding with Southwest Airlines to develop operational plans for electric air taxi networks based out of California airports. It also revealed plans for a Los Angeles air mobility network; its goal is to begin its network operations by 2026.
Is Archer a millionaire-maker stock?
To gauge if this stock has millionaire-maker potential, zoom out and consider the big picture over the next few decades.
Say you make a $10,000 investment in Archer. If you pay around $3.10 per share (near its recent prices), you would get 3,226 shares of Archer. For your position to reach a value of $1 million, the share price would have to go to $310 — a 100-fold increase.
Assuming the company doesn’t dilute its shareholders (which it is likely to do, as it will need funds to ramp up its growth), Archer’s market capitalization would likewise have to grow 100-fold from its current $1.15 billion to $115 billion.
Next, you have to determine how it would make sense to value the company. Will investors view it like a peer of Uber, which trades now at 3.8 times sales? Or more like a rival of Delta Airlines, which trades at 0.5 times sales? Archer would need revenue of between $30 billion and $230 billion to achieve valuations within these ranges. The company is currently pre-revenue.
However, assuming Archer begins commercial operations, analysts project it will make $190 million in revenue in 2026. If its stock were valued comparably to Uber, starting from its projected 2026 revenue, Archer’s top line would need to grow at a compound annual rate of 29% over the next two decades to bring it up to the necessary range, and that’s factoring in some generous assumptions.
A lot will have to go right
Morgan Stanley projects that the flying taxi market could grow to be worth $1 trillion a year by 2040 and $9 trillion by 2050.
However, the market is still not established, and success will depend heavily on whether or not the public accepts the technology and concludes that it’s safe. It’ll take time for air taxis to gain momentum on a commercial scale, and groundbreaking innovations tend to take a lot longer to reach mainstream adoption than enthusiasts expect.
In investing, you don’t want to put too much of your assets into any single stock. Instead, the prudent course is to own a diversified basket of stocks and take a long-term buy-and-hold approach, looking five to 10 years ahead. Focus on adding money to your investments consistently, growing your portfolio, and diversifying your investments across stocks with different attributes.
Archer could be one piece of the puzzle for you. But it should be a tiny piece if you are buying it today, given the speculative nature of the business and that commercial operations and cash flow-positive operations are still a long way off.
