Is Archer Aviation a Millionaire Maker?

Any stock could, theoretically, make you a millionaire. But the truth is that you probably want to own a collection of stocks, including more aggressive and less aggressive investments, as you build a diversified million-dollar portfolio.

If you can handle the risk, Archer Aviation (NYSE: ACHR) could be an interesting choice for the aggressive side of the equation. Here's why.

What does Archer Aviation do?

Archer Aviation builds a vertical-lift short-haul aircraft called Midnight. The big goal is to use Midnight as an air taxi. This is a totally new concept when it comes to the aerospace industry, though Archer Aviation isn't the only one trying to create a new industry niche. Right now, Archer Aviation is still trying to get Midnight approved for commercial use.

Image source: Getty Images.

So, technically, Archer Aviation's business is to build and test Midnight aircraft. That means it is a money-losing industrial business right now. Given what the company is trying to do, it is hardly surprising that it is bleeding red ink. However, this fact highlights the risk for investors. You need to think long-term here and, very importantly, believe that Archer Aviation will succeed in becoming a key player in the air taxi space, which itself doesn't exist yet.

High-risk/high-reward is the investment story and why Archer Aviation could help you build a million-dollar nest egg. If it does succeed, there is a big opportunity to fly customers above congested streets in every major city around the world. There's an opportunity to provide air taxis to militaries around the world. And there's an opportunity to use air taxis to move packages all over the world.

It is hard to define just how big any of these opportunities are since air taxis are only just being introduced in any form. But the opportunity could be quite large.

What has Archer Aviation achieved?

Archer Aviation has achieved a great deal in a short period of time. For example, the industrial start-up has an aircraft it is starting to mass produce. That aircraft is being tested, with recent records set for the length of a flight and the height of a flight. It is steadily moving toward the approvals it needs to get the final nod for Midnight to carry commercial customers.

Meanwhile, Archer is preparing to hit the ground running when it finally has the approvals it needs. The big story is in Abu Dhabi, where the company is working with a partner to set up its first air taxi service. Midnight aircraft in Abu Dhabi are already being tested in the local market, which has extreme conditions with regard to temperature and sand. The goal is to carry the first commercial customers in Abu Dhabi sometime in the next year or so.

After that, the company has set up partnerships in Ethiopia and Indonesia. The plan is to use the lessons learned from setting up an air taxi service in Abu Dhabi to create a template that can be used in Ethiopia and Indonesia. But that's not all Archer Aviation is doing.

The company has also received regulatory approval to operate as an airline in the United States. It also has approval to run a flight school. And it has early plans to set up air taxi services in California and New York, two U.S. cities where air taxis are likely to be well received.

You have to see the glass as half-full

The key turning point is going to be when Archer Aviation gets the final regulatory approvals it needs. The big test of air taxis is going to be in Abu Dhabi. And then things could really get cooking for this upstart aviation company.

That said, the financial statements here are likely to be pretty ugly in the near term, which is pretty normal for a business that's still in the start-up phase. But that's the risk/reward trade-off you have to be willing to make.

Archer Aviation could still crash and burn as a business, so only aggressive investors should be considering it. And even then, you need to believe strongly in both the company and the air taxi concept.

Reuben Gregg Brewer 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.