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Archer Aviation Raises Capital Worth $300M: To Buy the Stock or Let Go?
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Archer Aviation Inc. (ACHR - Free Report) recently secured new funding worth $301.8 million, bolstering its financial strength and enhancing its ability to advance its hybrid aircraft platform for defense and other markets. This financing attracted leading institutional investors, including funds and accounts managed by BlackRock.
With this latest funding, Archer’s liquidity amounts to approximately $1 billion at present. This funding should strategically support ACHR’s continued innovation and market expansion, strengthening its position in aerospace development.
Consequently, investors interested in aerospace stocks might rush to add ACHR to their portfolio. However, before making any hasty decision, it would be prudent to take a look at how ACHR has performed in terms of share price return over the past year, the stock’s long-term prospects as well as risks (if any) to investing in the same. This would help investors make a more insightful decision.
ACHR Stock Outperforms Its Industry, Sector & S&P500
Archer Aviation’s shares have surged a solid 97.5% over the past year, outperforming the Zacks Aerospace-Defense industry’s decline of 5.5% as well as the broader Zacks Aerospace sector’s gain of 3.2%. It also surpassed the S&P 500’s return of 23.2% in the same time frame.
Image Source: Zacks Investment Research
A similar stellar performance can be seen in the shares of other industry players like Rocket Lab USA (RKLB - Free Report) , Embraer (ERJ - Free Report) and RTX Corp. (RTX - Free Report) , which have witnessed a surge of 473%, 132.9% and 34.5%, respectively, over the past year.
What’s Been Pushing ACHR Stock Higher?
Over the past year, Archer Aviation has achieved a few key milestones, accelerating its progress toward successfully bringing its Midnight eVTOL aircraft into the commercial market and taking the company to the next level of revenue generation. In December 2024, ACHR received the certificate of occupancy for its high-volume manufacturing facility, ARC, which is connected to the Covington Municipal Airport in Georgia. Production at this facility, planned to begin early 2025, comes with the goal of reaching two aircraft per month by the end of 2025.
In December 2024, Archer Aviation announced an exclusive partnership with Andruil to jointly develop a hybrid vertical-take-off-and landing (VTOL) aircraft for critical defense applications targeting a potential program of record from the United States Department of Defense. The company also raised $430 million in additional equity capital.
In September, Soracle Corporation signed an agreement to purchase Midnight aircraft, worth up to $500 million, from ACHR. Meanwhile, it established a consortium in the United Arab Emirates (UAE) during the July-September quarter of 2024. This paved the way for launching its commercial air taxi services in the nation during the fourth quarter of 2025.
These accomplishments must have boosted investors’ confidence in this stock, which was duly reflected in its price performance at the bourses last year.
Will ACHR Continue With Its Winning Streak?
With increasing traffic congestion in urban cities, the demand for sustainable and low-carbon emission transport solutions is rising. This, in turn, has been boosting the market growth opportunity for eVTOL aircraft like Midnight. To this end, it is imperative to mention that the global eVTOL aircraft market is projected to witness a CAGR of 54.9% from 2024 to 2033, as per a recent study published by Precedence Research. Once ACHR starts delivering eVTOL aircraft to its commercial customers, it should benefit in the form of solid revenue growth opportunities and robust bottom-line growth, amidst the global eVTOL aircraft market’s prospects.
A sneak peek at the company’s near-term earnings estimates reflects the same.
Upbeat Earnings Estimates for ACHR
The Zacks Consensus Estimate for first-quarter and full-year 2025 earnings indicates a year-over-year improvement.
The consensus mark for first-quarter and full-year 2025 earnings suggests an upward revision, which indicates enhanced investor confidence in this stock’s earnings capabilities.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
ACHR’s Low Debt-to-Capital Ratio
As one can see below, ACHR’s total debt-to-capital ratio is much lower than that of its industry. This indicates that the company is capable of meeting its debt obligations with less difficulty than its industry.
Image Source: Zacks Investment Research
Risks to Consider Before Choosing ACHR Stock
ACHR offers promising near-term prospects, but whether its business will be sustainable in the long run remains uncertain. This is because the eVTOL aircraft market is still in its early stages, and ACHR's success depends not only on its ability to design, develop and certify eVTOL aircraft but also on how the demand for these vehicles evolves.
Public acceptance of eVTOLs as an alternative to traditional transport methods could face hurdles related to safety, noise and affordability concerns. Without widespread recognition, ACHR's growth potential may be constrained.
Additionally, ACHR and other aerospace manufacturers are navigating industry challenges, including supply-chain disruptions, rising jet fuel prices and a shortage of skilled labor. Such factors could hinder ACHR’s ability to complete its projects on time. A significant delay in obtaining FAA certification might necessitate raising additional capital beyond its current reserves, further impacting the timeline for revenue generation. Considering these uncertainties, ACHR faces market and operational risks that could affect its ability to establish a sustainable presence in the evolving eVTOL industry.
What Should an Investor Do?
Investors interested in Archer Aviation stock add it to their portfolio now, considering its low debt-to-capital ratio, upward revision in earnings estimate and stellar performance at the bourses over the past year.
Image: Bigstock
Archer Aviation Raises Capital Worth $300M: To Buy the Stock or Let Go?
Archer Aviation Inc. (ACHR - Free Report) recently secured new funding worth $301.8 million, bolstering its financial strength and enhancing its ability to advance its hybrid aircraft platform for defense and other markets. This financing attracted leading institutional investors, including funds and accounts managed by BlackRock.
With this latest funding, Archer’s liquidity amounts to approximately $1 billion at present. This funding should strategically support ACHR’s continued innovation and market expansion, strengthening its position in aerospace development.
Consequently, investors interested in aerospace stocks might rush to add ACHR to their portfolio. However, before making any hasty decision, it would be prudent to take a look at how ACHR has performed in terms of share price return over the past year, the stock’s long-term prospects as well as risks (if any) to investing in the same. This would help investors make a more insightful decision.
ACHR Stock Outperforms Its Industry, Sector & S&P500
Archer Aviation’s shares have surged a solid 97.5% over the past year, outperforming the Zacks Aerospace-Defense industry’s decline of 5.5% as well as the broader Zacks Aerospace sector’s gain of 3.2%. It also surpassed the S&P 500’s return of 23.2% in the same time frame.
Image Source: Zacks Investment Research
A similar stellar performance can be seen in the shares of other industry players like Rocket Lab USA (RKLB - Free Report) , Embraer (ERJ - Free Report) and RTX Corp. (RTX - Free Report) , which have witnessed a surge of 473%, 132.9% and 34.5%, respectively, over the past year.
What’s Been Pushing ACHR Stock Higher?
Over the past year, Archer Aviation has achieved a few key milestones, accelerating its progress toward successfully bringing its Midnight eVTOL aircraft into the commercial market and taking the company to the next level of revenue generation. In December 2024, ACHR received the certificate of occupancy for its high-volume manufacturing facility, ARC, which is connected to the Covington Municipal Airport in Georgia. Production at this facility, planned to begin early 2025, comes with the goal of reaching two aircraft per month by the end of 2025.
In December 2024, Archer Aviation announced an exclusive partnership with Andruil to jointly develop a hybrid vertical-take-off-and landing (VTOL) aircraft for critical defense applications targeting a potential program of record from the United States Department of Defense. The company also raised $430 million in additional equity capital.
In September, Soracle Corporation signed an agreement to purchase Midnight aircraft, worth up to $500 million, from ACHR. Meanwhile, it established a consortium in the United Arab Emirates (UAE) during the July-September quarter of 2024. This paved the way for launching its commercial air taxi services in the nation during the fourth quarter of 2025.
These accomplishments must have boosted investors’ confidence in this stock, which was duly reflected in its price performance at the bourses last year.
Will ACHR Continue With Its Winning Streak?
With increasing traffic congestion in urban cities, the demand for sustainable and low-carbon emission transport solutions is rising. This, in turn, has been boosting the market growth opportunity for eVTOL aircraft like Midnight. To this end, it is imperative to mention that the global eVTOL aircraft market is projected to witness a CAGR of 54.9% from 2024 to 2033, as per a recent study published by Precedence Research. Once ACHR starts delivering eVTOL aircraft to its commercial customers, it should benefit in the form of solid revenue growth opportunities and robust bottom-line growth, amidst the global eVTOL aircraft market’s prospects.
A sneak peek at the company’s near-term earnings estimates reflects the same.
Upbeat Earnings Estimates for ACHR
The Zacks Consensus Estimate for first-quarter and full-year 2025 earnings indicates a year-over-year improvement.
The consensus mark for first-quarter and full-year 2025 earnings suggests an upward revision, which indicates enhanced investor confidence in this stock’s earnings capabilities.
Image Source: Zacks Investment Research
ACHR’s Low Debt-to-Capital Ratio
As one can see below, ACHR’s total debt-to-capital ratio is much lower than that of its industry. This indicates that the company is capable of meeting its debt obligations with less difficulty than its industry.
Risks to Consider Before Choosing ACHR Stock
ACHR offers promising near-term prospects, but whether its business will be sustainable in the long run remains uncertain. This is because the eVTOL aircraft market is still in its early stages, and ACHR's success depends not only on its ability to design, develop and certify eVTOL aircraft but also on how the demand for these vehicles evolves.
Public acceptance of eVTOLs as an alternative to traditional transport methods could face hurdles related to safety, noise and affordability concerns. Without widespread recognition, ACHR's growth potential may be constrained.
Additionally, ACHR and other aerospace manufacturers are navigating industry challenges, including supply-chain disruptions, rising jet fuel prices and a shortage of skilled labor. Such factors could hinder ACHR’s ability to complete its projects on time. A significant delay in obtaining FAA certification might necessitate raising additional capital beyond its current reserves, further impacting the timeline for revenue generation. Considering these uncertainties, ACHR faces market and operational risks that could affect its ability to establish a sustainable presence in the evolving eVTOL industry.
What Should an Investor Do?
Investors interested in Archer Aviation stock add it to their portfolio now, considering its low debt-to-capital ratio, upward revision in earnings estimate and stellar performance at the bourses over the past year.
The company’s Zacks Rank #2 (Buy) also supports our investment thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.