Up 264%, Is Archer Aviation Stock Still A Buying Opportunity?

Archer Aviation (NYSE: ACHR) has given early investors a thrilling ride. The electric vertical takeoff and landing aircraft (eVTOL) company has seen its stock soar 264% over the past year, capturing the imagination of those betting on the future of urban air mobility. But after such a massive run-up, it's a question of asking: Is there still room for liftoff, or has the stock flown too far, too fast?

The promise of urban air mobility

Archer is one of the leading players in the race to commercialize eVTOL aircraft -- electric air taxis that take off and land vertically, much like helicopters, but with lower noise, reduced emissions, and lower operational costs. The company's flagship vehicle, the Midnight, is designed for short-distance urban travel--think a 10- to 20-minute flight across a congested city instead of a 60-minute car ride.

The idea sounds futuristic, but it's closer to reality than many think. Archer is targeting early commercial deployments of its aircraft in 2026. Back in April, Archer announced a planned partnership with United Airlines to move aircraft between major airports and city centers in New York City as part of an "air taxi network." This could be just the start of a broader network of flight offerings from Archer Aviation.

There's a ton of potential for this type of idea. The question is how to compare the stock price with its actual results.

Image source: Getty Images.

Progress on production -- but no revenue yet

Perhaps the biggest challenge with figuring out Archer's stock price is that there's very little to go on. The company has no revenue, so we have to look at news and plans rather than actual financial results. According to its Q2 2025 press release, Archer has begun ramping up manufacturing of the Midnight, its eVTOL, with six in the works.

However, despite this progress, the company remains deep in the development stage, burning through cash as it builds and tests aircraft. A prime example was the second quarter, where the company had a generally accepted accounting principles (GAAP) loss of $206 million. It's not the end of the world, as it had over $1.7 billion in cash/equivalents, but it does beg the question of how far their runway is before they have to raise more capital. For reference, shares outstanding increased 73% year over year in the second quarter to over 579 million. We're talking about some serious dilution for shareholders.

All of this creates a wide gap between the expectations surrounding its market potential and the reality of its current business model. Investors are effectively betting on a future that hasn't arrived yet and is expensive to make.

A sky-high valuation for a pre-revenue company

At a current market cap of roughly $7.6 billion, Archer's valuation is difficult to justify based on fundamentals alone. With no revenue and continuing losses, the company's value is derived almost entirely from its future potential. That's a big leap of faith.

While Archer has promising technology and impressive strategic partners, the eVTOL industry faces several hurdles, including regulatory approval, infrastructure development, and public adoption. It could take years before the business generates meaningful profits.

The bull and bear cases

Despite these challenges, the potential market for eVTOL aircraft could be enormous. If Archer becomes one of the dominant players in that ecosystem, today's valuation could look cheap in hindsight. But this still assumes a lot in the future.

Stellantis (NYSE: STLA) is helping with large-scale manufacturing, and Archer has some big opportunities on the horizon. These include being the air taxi provider for the 2028 Olympic Games in Los Angeles, involvement in the UAE, and ties to defense programs. Overall, there are a lot of avenues for Archer to pursue; it's just a question of if and when.

On the bear side, investors need to recognize that Archer's success is far from guaranteed. The company faces intense competition from rivals like Joby Aviation (NYSE: JOBY) and Lilium, as well as from traditional aerospace giants that can easily explore their own eVTOL concepts. Moreover, FAA certification is a complex, multiyear process with no guarantees of timely approval.

Even if certification comes through, scaling manufacturing and building the necessary vertiport infrastructure and aircraft could be timely. Meanwhile, Archer continues to burn cash, and further capital raises could dilute existing shareholders' positions more than they already have.

The bottom line

Archer Aviation is a bold bet on the future of citywide air travel. Its Midnight aircraft could redefine how people move across crowded cities--and early progress suggests that the dream is inching closer to reality. However, after a 264% stock surge, the market is already pricing in a lot of that potential. With no revenue yet and multiple hurdles ahead, Archer looks more like a speculative growth story than a grounded investment opportunity. For investors with a long time horizon and a high risk tolerance, Archer could be worth watching. But for most, it might be wiser to wait until this flying taxi maker proves it can actually get off the ground--financially and literally.

David Butler has no position in any of the stocks mentioned. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.