Why Archer Aviation Stock Plummeted This Week
Key Points
Archer Aviation's valuation was pressured this week amid bearish macro catalysts.
Concerns about valuations for AI stocks and macroeconomic data prompted sell-offs.
Archer's Q3 report also arrived with news that caused investors to move out of their positions in the company.
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Archer Aviation (NYSE: ACHR) stock rapidly lost altitude this week. The electric vertical take-off and landing (eVTOL) aviation company's share price was fell 27.1% across the stretch. Over the same period, the S&P 500 fell 1.6%, and the Nasdaq Composite fell 3%.
Archer Aviation lost ground amid a rise in bearish momentum for the broader market. The company's share price also got hit with a significant contraction on the heels of the company's third-quarter earnings report.
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Image source: Archer Aviation.
Archer Aviation stock fell as investors adopted risk-off positioning
Investors became broadly more cautious about companies with highly growth-dependent valuations this week. Concerns that elevated valuations for artificial intelligence (AI) may have created a pricing bubble across the market resulted in substantial pullbacks for the levels of major indexes.
New macroeconomic data also factored into the bearish momentum. Challenger, Gray & Christmas published a report on Thursday showing that U.S. companies had laid off more than 153,000 employees in October. According to the report, monthly layoffs came in at their highest level since 2023.
Investors weren't thrilled with Archer's Q3 update
Archer posted a net loss of $129.9 million on zero revenue in the third quarter. While the lack of revenue in the quarter was not unexpected, the loss for the period came in larger than anticipated.
In conjunction with the quarterly report, Archer announced that it had raised $650 million in funding by selling newly issued stock. The company also announced that it will be acquiring the Hawthorne airport in a $126 million, all-cash deal. The airport is located within several miles of LAX and will be used as base of operations for serving the area.
While the company said that it was targeting annual production of 50 eVTOL crafts, the company's expansion forecasts, net loss, and capital moves generally disappointed investors.
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Keith Noonan has positions in Archer Aviation. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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