Why Archer Aviation Stock Lifted Off in October

Shares of the electric vertical takeoff and landing (eVTOL) company, Archer Aviation (NYSE: ACHR), spiked in October after the company successfully completed a public demonstration of its Midnight aircraft at an airshow and as the company acquired air taxi patents and signed a new partnership with an airline.

The busy month for Archer boosted investor optimism in the company and pushed shares up 17.1% during the month.

Image source: Archer Aviation.

More flights, patents, and partnerships

The first bit of news that lifted Archer's stock last month came when the company's Midnight aircraft made public display flights at the California International Air Show. The demonstrations, spanning two days, followed the company's recent wins of flying the aircraft to new heights of up to 10,000 feet and completing its longest piloted test flight of 55 miles.

Adding to the good news later in the month, Archer said that it had acquired a trove of about 300 patents from a German eVTOL company that had filed for bankruptcy for a second time. The patents are for advanced eVTOL technologies, including propeller systems, battery management, ducted fans, aircraft design, and electric engines. Archer paid about 18 million euros for the portfolio, which brings the company's patent total to more than 1,000.

What's more, Archer announced toward the end of October that it was starting a new partnership with Korean Air to commercialize its aircraft in South Korea, with the potential for the airline to purchase up to 100 of Archer's Midnight aircraft. Archer has worked to secure partnerships with airlines and other companies, and the new partnership with Korean Air could be significant, considering the size of potential aircraft sales to the airline.

Third-quarter results are landing soon

Archer is clearly racking up some wins with its public demonstrations, expanding patent portfolio, and new partnership. But I think it's important for potential shareholders to know that Archer still doesn't have any revenue and the company has significant losses.

Archer will report its third-quarter results on Nov. 6, with management guiding for a non-GAAP (adjusted) loss of $110 million to $130 million on the basis of earnings before interest, taxes, depreciation, and amortization (EBITDA). That means Archer's losses will expand significantly from its EBITDA loss of $93.5 million in the year-ago quarter.

Investors should understand that buying Archer's stock right now is a fairly speculative move based on hope that the company will eventually significantly ramp up sales of its Midnight aircraft and generate air taxi revenue.

Chris Neiger 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.