Reverse Stock-Split Watch: Archer Aviation at $4 and Joby Aviation at $5. Here's Which One Gets There First -- and What History Says Happens After.

Shares of Archer Aviation (NYSE: ACHR) have fallen 48.5% so far in 2026, closing at $3.87 on Nov. 5. Joby Aviation (NYSE: JOBY) shares are down by 59.6% over the same period, closing at $5.30.

Despite the steep decline in share prices, neither company is close to needing a reverse stock split to meet the New York Stock Exchange (NYSE) listing requirements. The NYSE generally notifies companies of noncompliance when their average closing share price falls below $1 over 30 consecutive trading sessions.

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But financing can be a major concern for shareholders. Both companies continue to spend heavily on aircraft development and may need to issue additional shares to fund their operations. Unlike a reverse stock split, issuing additional shares can dilute existing shareholders.

What would trigger a reverse stock split?

A reverse stock split reduces the number of outstanding shares while increasing the share price. So, in the case of a 1-for-10 split, it would convert 1,000 shares trading at $4 each into 100 shares trading at $40. The investor's $4,000 investment remains unchanged immediately after the split, assuming no change in market value.

A reverse split could become necessary for Archer Aviation or Joby Aviation to maintain their NYSE listings if their share prices fall substantially further. Companies notified of a minimum-price violation generally have six months to regain compliance. A reverse split is one option, although a recovery in the share price could also resolve the problem.

Shares of Archer Aviation and Joby Aviation would need to fall another 74.2% and 81.1%, respectively, from their Nov. 5 closing prices to reach $1. However, merely reaching $1 would not automatically put either company in violation of the NYSE's 30-session average-price rule. Neither company sought shareholder approval for a reverse stock split at its 2026 annual meeting.

Which company is more vulnerable?

Archer Aviation and Joby Aviation are developing electric aircraft for short passenger flights within and between cities. Archer Aviation plans to build its air taxi network in partnership with airline and infrastructure partners. Joby Aviation intends to operate its own passenger services in some markets and work with other operators in others. Both companies also plan to sell aircraft and develop defense technologies.

Archer Aviation exited the second quarter (ending June 30, 2026) with $1.56 billion in cash and short-term investments. The company spent $156.4 million on operating activities and another $37.1 million on capital expenditures in the second quarter. However, the company's revenue was just $5 million, mainly from Hawthorne Airport operations.

Joby Aviation exited the third quarter (ending Sept. 30, 2026) with $2.20 billion in cash and investments and around $703 million of long-term debt. The company used around $195 million of cash during the third quarter. Joby Aviation also reported $55.1 million in revenue in the third quarter, primarily from Blade's existing passenger transportation services rather than commercial operations using Joby's electric air taxis.

These figures cover different reporting periods. Joby Aviation released its third-quarter results on Nov. 4, while Archer Aviation is scheduled to report on Nov. 9. Based on their latest available results, Joby Aviation has a larger cash balance than Archer Aviation but also carries substantially more debt. After subtracting their reported debt, both companies have approximately $1.5 billion in net cash. However, most of Joby Aviation's debt is not due until 2032, reducing its near-term repayment obligations.

The companies' planned acquisitions could further change their financial positions. Joby Aviation plans to pay approximately $450 million in cash and $50 million in stock to acquire defense contractor Resonant Sciences. If completed as announced, the acquisition would reduce Joby's cash reserves. Archer Aviation's proposed acquisition of Boeing's Wisk Aero, Insitu, and SkyGrid businesses would instead be funded mainly through issuing new shares, potentially diluting existing shareholders.

What does history say happens afterward?

A reverse stock split does not directly reduce an investor's ownership value. However, companies undertaking reverse splits have historically delivered poor stock returns.

A 1997 study by researchers Hemang Desai and Prem Jain examined 76 reverse stock splits announced between 1976 and 1991. On average, these stocks underperformed their benchmarks by 10.76% in the following year and 33.90% over three years, measured after the announcement month. However, these results do not establish that reverse splits themselves caused the underperformance.

Electric aircraft manufacturer Vertical Aerospace provides a more recent example. The company completed a 1-for-10 reverse stock split in September 2024. Yet in September 2026, the company received another NYSE noncompliance notice after its average closing share price fell below $1 over 30 trading sessions.

Vertical Aerospace's experience shows that increasing the share price through a reverse split does not necessarily resolve the financial problems behind a stock's decline. Hence, for investors, future cash needs and business performance should matter more than the reverse split itself.

What should shareholders watch instead?

The more immediate concern is how much additional capital Archer Aviation and Joby Aviation may need before their electric air-taxi businesses generate meaningful revenue.

Investors should also monitor the companies' progress toward Federal Aviation Administration (FAA) certification, manufacturing costs, and whether planned acquisitions improve future cash flows. Joby Aviation has reported progress in the fifth and final stage of FAA type certification. Archer Aviation's proposed Boeing acquisition could add defense revenue. However, both companies still face substantial spending requirements.

Archer Aviation could face pressure on its NYSE listing price first if both stocks continue to fall at similar rates. However, neither company currently faces an immediate reverse stock split requirement.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.