Archer Aviation (ACHR 0.35%) is a stock that requires a strong stomach to own. The shares have fallen around 60% from their highs a few years ago. That said, the long-term opportunity presented by the company's air taxis has started to catch investors' attention again, with the stock up nearly 70% over the past year.
Here's why 2025 could be the right time to step into Archer Aviation if you are an aggressive investor.
What does Archer Aviation do?
Archer Aviation builds vertical lift, short-haul electric aircrafts. These are basically air taxis, meant to carry a small number of people over short distances. The technology is pretty interesting and borders on science fiction, only it's real and the company is actually testing its products for safety right now. That's where the problem and opportunity comes in.
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In the United States, getting an aircraft approved for commercial use is not an easy task. That gets more complicated when the company doing it hasn't done it before. And even more complicated still when the aircraft basically represents a new way of flying. So Archer Aviation's future, to a large degree, is in the hands of the Federal Aviation Administration (FAA). But there are at least three reasons to be positive here for more aggressive investors.
1. Archer Aviation is making important progress
This may sound simplistic, but Archer Aviation has a production facility and it is producing aircraft. The numbers are small and right now all of the aircraft are meant for testing. But this is not a good idea on the drawing board anymore. It is a real product. The problem is that the product needs a lot of testing before it can be produced at scale. That, however, shouldn't overshadow what the company has achieved.
2. It hopes to carry its first commercial customers in 2025
It is highly unlikely that Archer Aviation will receive FAA approval for its planes to operate in the United States in 2025. But U.S. standards are very high, and the United States isn't the only market on Earth that might appreciate an air taxi service -- which is why the big news for 2025 is likely to come out of Abu Dhabi.
There are actually two goals in one with the Abu Dhabi launch. First is the simple goal of carrying commercial customers for the first time. That's the one that will likely make the headlines. But the more important goal is to create a template that Archer Aviation can use to set up additional partners in the future. It already has a partner in Ethiopia interested in starting an air taxi service, for example.
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If Archer can get its Abu Dhabi plans up and running, it will be able to take what it learns and make the process easier in other regions. That's a huge benefit and goes way beyond simply carrying a commercial passenger.
3. The FAA has cleared the way for Archer in the U.S.
The United States clearly won't be the first market in which Archer Aviation's aircraft are flying commercial customers. But that doesn't mean the company isn't making important progress on its goal of operating a domestic air taxi service. Indeed, while the FAA is carefully evaluating the aircraft, it has already approved Archer Aviation to run a commercial airline.
With that approval in the bank, the company has announced plans to start an air taxi service in California. And it has also received FAA approval to create a pilot training academy. Basically, all that's left is the approval for the aircraft and Archer Aviation will hit the ground running. Add in the lessons it learns in Abu Dhabi and starting its air taxi service in the United States could go very smoothly.
Thing are lining up nicely for Archer Aviation
All in, Archer Aviation is getting tantalizingly close to the finish line. It's still only appropriate for more aggressive investors, given that there remains material work to be done. But if you are an aggressive investor, there are more and more reasons to buy Archer Aviation piling up as the days go by.
