Is Archer Aviation Stock Your Ticket to Becoming a Millionaire?

Key Points

• Archer Aviation is a money-losing startup.

• The company is attempting to build a business around what amounts to air taxis.

• Wall Street seems to like the story for the most part, but you'll need a strong stomach to stick around.

• 10 stocks we like better than Archer Aviation ›

Shares of Archer Aviation (NYSE: ACHR) have fallen more than 33% from their high-water mark over the past few months. That's the second drawdown of that magnitude in the past year. And yet the stock is still up more than 150% over the past 12 months. That volatility is important to keep in mind because if you can't handle a bumpy ride, you won't want to buy this aviation startup no matter how positive the long-term opportunity seems.

What does Archer Aviation do?

At this point in its life, Archer Aviation builds aircraft for testing purposes. It is currently building a small vertical lift vehicle called Midnight that is meant for traveling short distances while carrying just a few passengers (or a light load of items).

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Midnight is basically an air taxi. It is a completely new form of transportation and regulators are still putting Midnight through its paces. The company has competition, but there is likely to be enough room in the air taxi market for more than one vehicle supplier.

Image source: Getty Images.

The problem right now is that this industrial company is bleeding red ink. It has no choice but to go through this financially painful process, however, because it needs regulator approval before its aircraft can be used commercially. Investors buying the stock are effectively betting that Archer Aviation will be able to get its Midnight aircraft approved. This alone will be a huge success, as it will have effectively proven itself capable of breaking into the highly competitive aerospace industry.

That said, just getting the needed approvals is only the first step. The second step, convincing consumers that they want to use an air taxi, could actually take longer. But the groundwork for that is being laid right now.

Watch the skies in Abu Dhabi in 2026

At the moment Archer Aviation is working on setting up the first air taxi service using its Midnight aircraft in Abu Dhabi. The hope is to carry commercial customers sometime in late 2025 or early 2026. A single Midnight aircraft has been delivered for local testing, with the potential for more aircraft to be on the way sometime soon. Archer Aviation is close to completing three more Midnight aircraft and has another three lined up behind that. (Ramping up Midnight production is another goal the company is currently working on.)

Abu Dhabi is an important test of the company's products and the entire air taxi service concept. But it is just the start, with Archer Aviation having already signed up partners in Ethiopia and Indonesia. What Archer Aviation learns in Abu Dhabi will allow it to more easily launch subsequent air taxi services. Then there's the company's plans to operate services in California and New York, with Archer Aviation already having been selected as the exclusive air taxi service for the 2028 Olympics in California.

Once the company gets the regulatory approvals it needs, Archer Aviation looks like it is ready to take flight -- which is why the stock has risen so much over the past year. But investor emotions have a lot to do with the stock moves, as the two deep drawdowns highlight. This remains a story stock where a big opportunity is combined with a lot of red ink at the bottom of the company's income statement.

Can Archer Aviation be your ticket to seven figures?

It would likely require a big financial bet on Archer Aviation's stock for it to turn into a million-dollar investment. Even the most aggressive growth investors would have to think twice before placing a wager like that. But at the same time, if the Abu Dhabi service gets off the ground and the follow-on locations go smoothly, there could be a lot of opportunity for growth. And given the importance of investor sentiment right now, the stock could also plunge if anything goes wrong, making this a high-risk and high-reward investment story.

Most investors are probably better off waiting for Archer Aviation to reach a few more milestones before investing. After all, the opportunity is far larger than just one air taxi service in one country. So there's a long-term opportunity here, but only risk-tolerant investors should probably be looking at buying Archer Aviation right now in hopes of a big payoff.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.