Archer Aviation Unveils New Commercial Aircraft in Partnership With Anduril

Archer Aviation(NYSE:ACHR) has spent years developing an electric aircraft designed to carry four passengers across congested cities. Today, July 22, it just unveiled an aircraft that won’t carry any humans, not even a pilot.

“Halo” is its name, and it’s the commercial sibling of “Thunder," the defense aircraft Anduril unveiled earlier this week. Despite their different missions, Halo and Thunder share the same machinery: a hybrid-electric powertrain and two enormous tilt rotors that lift them vertically from the ground, then turn forward and pull them through the air like conventional airplanes.

The unveiling is one of Archer’s biggest developments of the year. And yet, if you looked only at Archer’s stock, you might have thought today was just another ordinary day. As of writing, Archer is down roughly 1%.

Still, I think this is big news for Archer investors, with long-term implications for its business. Let’s take a look.

How Halo can help broaden Archer’s bull case

In plain English, Halo gives Archer another way to answer a question that has puzzled investors for years: Can the company actually bring a commercially viable product to market (ideally one with wings) before its enormous cash burn devours its financial runway?

It has worked tirelessly to secure FAA type certification for Midnight, its flagship electric vertical takeoff and landing (eVTOL) aircraft. And although it recently completed the third phase of the FAA’s four-phase process, the last step is the most demanding, requiring flight testing and analysis to prove Midnight is airworthy.

On that note, here’s a kicker: Archer hasn’t yet publicly demonstrated a piloted transition of Midnight (that is, shifting from vertical to forward flight with a pilot in the cockpit). That’s not to say Midnight cannot transition. But without a public demonstration, the question will surely linger.

Image source: Archer Aviation.

Speaking of pilots, Halo doesn’t need one. Like its sibling, Thunder, the aircraft is autonomous, which could allow it to perform hazardous missions without exposing a crew to danger. Just picture it: Halo can rush medicine to hospitals, or take supplies to disaster zones, or haul machinery to oil rigs. There is, in short, a legitimate commercial need for the kind of autonomous cargo and logistics missions that Halo can pull off. And tapping into that demand could generate meaningful revenue for Archer, something it currently lacks.

But let’s not get ahead of ourselves: This is an aircraft, not a revenue reveal. Archer named Marubeni Aerospace as Halo’s strategic launch partner, but it hasn’t disclosed any firm orders. And unlike Thunder, whose pathway to military airworthiness might be shorter than the FAA certification process for a civilian eVTOL, an autonomous commercial aircraft will likely face a more extensive approval process. Indeed, it’s worth noting that Thunder is planned for flight testing in 2027, whereas a first-flight date for Halo was not disclosed in today’s announcement.

As such, this is good news, but it still leaves Archer investors in roughly the same place: staring at a potentially large market opportunity that could still be years away.

Does the Archer-Anduril platform make Archer a buy?

The unveiling of Thunder and Halo is a big update from Archer, but it doesn’t necessarily make it a screaming buy. Indeed, Archer still faces pretty much the same challenges as before: It needs to certify Midnight, launch commercial operations in the U.S., manufacture aircraft at scale, lay the infrastructure needed to support them, and prove its business can turn a profit over the long haul.

So, is it a buy? If you can tolerate volatility, picking up some shares of Archer now could prove rewarding over time. Most investors, however, will probably want to watch Archer from the sidelines, at least until Midnight secures FAA certification.

Steven Porrello has positions in Archer Aviation. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.