3 Archer Aviation Red Flags That Investors Shouldn't Ignore

Key Points

• Archer Aviation doesn't generate any revenue yet.

• Regulatory certification and commercial scaling remain uncertain.

• Competition is fierce.

• 10 stocks we like better than Archer Aviation ›

Archer Aviation (NYSE: ACHR) has garnered significant attention in 2025. The company is building electric vertical takeoff and landing (eVTOL) aircraft -- a futuristic vision of air taxis that could reshape urban transportation.

With partnerships lined up and its first aircraft, the Midnight, undergoing certification, Archer's story is one of high potential. But investors should not confuse potential with certainty. The stock carries several material risks that every shareholder or investor considering the stock must carefully consider.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »

Image source: Getty Images.

1. No commercial revenue yet

Despite all the optimism and progress, Archer remains a pre-revenue company. Its latest quarterly results confirmed the pattern: Operating expenses continue to rise, but sales have not yet started. Management projects initial commercial flights in 2026, which means at three months -- if not more -- before any meaningful revenue shows up on the income statement.

That timeline matters. Companies without revenue depend entirely on outside capital to fund operations. Archer had about $1.7 billion in liquidity at last count, but cash burn remains heavy, with quarterly operating losses reaching $176 million. Even with disciplined expense management, the company will likely need to raise additional funds before it becomes profitable. New financing could come from equity issuance, debt, or government support. All options carry trade-offs for shareholders.

Investors should view Archer's lack of revenue as a double-edged sword: The upside is enormous if the business model works, but the risk of dilution or funding shortfalls is equally real.

2. Execution risk on certification and scaling

Developing a new aircraft is one challenge. Obtaining certification by the Federal Aviation Administration (FAA) is another. Archer aims to complete certification of its Midnight eVTOL aircraft by 2026, but regulatory processes rarely run on schedule. The FAA has limited experience with eVTOL aircraft, which could introduce delays or additional hurdles.

Even if Archer secures approval, scaling production presents another challenge since ramping from prototype to hundreds of aircraft requires flawless execution. Many aerospace programs have stumbled at this stage, facing cost overruns, supply chain problems, or quality control issues.

For investors, the risk is straightforward: A delay in certification or scaling could push back revenue timelines, increase cash burn, and test market patience. In an industry where trust and safety are paramount, Archer has little margin for error.

3. A crowded and competitive market

Archer is not alone in chasing the eVTOL opportunity. Joby Aviation is another frontrunner, while other established aerospace giants are also working on competing solutions.

This competition creates uncertainty about market share and profitability. Even if Archer launches on time, it may struggle to differentiate itself from similar services. Airlines, logistics providers, and ride-hailing platforms are likely to partner with multiple eVTOL manufacturers rather than betting on a single winner.

Investors should remember that early mover advantage in new industries does not always guarantee long-term leadership. Execution, cost efficiency, safety record, and customer adoption will ultimately determine who thrives.

The silver lining is that the estimated target addressable market is enormous (in the trillions of dollars), allowing multiple players to compete and succeed.

What does it mean for investors?

Archer Aviation has achieved several notable milestones, including securing airline partnerships, garnering interest from the military, and making significant progress in regulatory matters. These achievements show the company is moving closer to making flying taxis a reality.

But investors must keep perspective. Archer has not yet generated revenue. Its certification timeline remains untested. The business will likely need to raise billions more, which could dilute the value of existing shareholders.

That does not mean Archer will fail. The potential market for urban air mobility could reach $1 trillion by 2040, according to Morgan Stanley, and Archer is one of the leaders. For investors with a high tolerance for risk, the stock offers a speculative way to bet on a futuristic industry.

For most investors, however, Archer belongs on the watch list. Until the company clears certification hurdles and proves customer demands, the risks outweigh the potential rewards.

Should you invest $1,000 in Archer Aviation right now?

Before you buy stock in Archer Aviation, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Archer Aviation wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $621,976!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,150,085!*

Now, it’s worth noting Stock Advisor’s total average return is 1,058% — a market-crushing outperformance compared to 191% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 29, 2025

Lawrence Nga 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.