Is Archer Stock a Millionaire Maker?

Millionaire-making stocks don't always look obvious from the start. Unfortunately, by the time the business gets proven, the stock's biggest gains are usually behind it. That's the trade-off with growth stocks: You have to accept uncertainty before the fundamentals can impart confidence in the business's growth and survival.

Archer Aviation (NYSE: ACHR) is currently one of these speculative stocks. The aviation start-up is pre-commercial, burning cash, and risky. Yet for investors willing to take the risk, the upside from Archer's current sub-$7 share price could be enormous. Here's why.

Image source: Archer Aviation.

Adoption of eVTOLs will be slow, but the payoff could be enormous

Archer Aviation wants to take a driver's commute to the skies. The company is designing an air taxi -- technically, an electric vertical takeoff and landing (eVTOL) aircraft -- that could turn an hour or so in traffic into 10 minutes in the air. It plans to sell these aircraft (called Midnight) to partners in addition to operating an air taxi network of its own.

It's essentially building a flying car. Big companies in aviation and manufacturing are also excited about this idea, which is a good sign. Archer has an early operating partner in United Airlines (NASDAQ: UAL), which has agreed to purchase $1 billion of Archer's aircraft, with an option for another $500 million. It also has also partnered with international airlines, such as Japan Airlines and Korean Air, to establish operations overseas.

Archer has also formed a strategic partnership with defense company Anduril Industries to build a hybrid aircraft for defense applications. Although this partnership isn't discussed as much as the others, it was one of Archer's best early moves, as it shows the company is already thinking about how to diversify its business outside of air taxi services.

That brings me to this: In 2021, Morgan Stanley estimated that the total addressable market (TAM) for eVTOLs and urban air mobility could reach $1 trillion by 2040, and $9 trillion by 2050. Adoption of eVTOLs, analysts warned, would be "frustratingly low" through most of the decade, despite major advances in the technology. In 2040, or thereabouts, the eVTOL market should then hit an inflection point, after which these aircraft would be widely adopted for transportation (both of passengers and goods) and defense purposes.

For eVTOL investors today, this timeline is crucial to keep in mind. Archer, like other air taxi start-ups, such as Joby Aviation, won't scale its technology in this decade; it might not even be well known outside of investing circles. Indeed, it could take another 14 years before mass adoption of eVTOLs makes these companies as familiar as Uber Technologies or Lyft, possibly even longer than that.

Morgan Stanley's study was, of course, published before the White House's eVTOL program, which aims to accelerate development and adoption of these aircraft. As a participant in this program, Archer now anticipates to roll out operations in select cities in the U.S. in the second half of 2026.

If Archer can successfully demonstrate that its Midnight aircraft is safe for passengers, this stock could mint new millionaires. Just know what you're buying first -- an eVTOL start-up with plenty of execution risks to overcome -- and size positions according to your risk tolerance.

Steven Porrello has positions in Archer Aviation and Joby Aviation. The Motley Fool has positions in and recommends Lyft and Uber Technologies. The Motley Fool has a disclosure policy.