Why Archer Aviation Stock Took Flight on Monday
Key Points
Archer and Anduril unveiled their jointly developed aircraft with both commercial and defense applications.
Archer will announce its first commercial customers later this week.
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Shares of Archer Aviation (NYSE: ACHR) charged sharply higher Monday morning, gaining as much as 19.8%. As of 12:50 p.m. ET, the stock was still up 18.9%.
The catalyst that sent the electric vertical takeoff-and-landing (eVTOL) aircraft specialist higher was the launch of the company's jointly developed autonomous vertical lift aircraft.
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Flying high
In a joint press release, Archer and Anduril unveiled a hybrid eVTOL with applications in both the commercial and defense sectors. The pair described it as "a new class of autonomous aircraft with the speed, range, payload, and operating cost that defense and commercial missions demand."
Anduril showcased the defense version, dubbed Thunder, a Group 5 autonomous attack rotorcraft. This group of aircraft are generally the largest and most capable of the Defense Department's Unmanned Aircraft Systems (UAS). Thunder was built on a dual-use platform designed for both defense and commercial applications.
The vehicle was built from the ground up. What sets this aircraft apart is "a hybrid-electric powertrain enables the aircraft to achieve significant range and endurance, while still maintaining the necessary precision to closely optimize power through the full range of flight conditions." Furthermore, the dual-tilt rotors allow the vehicle to switch to cruise mode, reducing power and fuel consumption.
Archer Aviation plans to announce its first commercial customers for the aircraft later this week.
Is the stock a buy?
Investors in Archer Aviation have endured a bumpy ride since the company debuted five years ago. After failing to deliver on its promise, shareholders lost faith, and the stock has plunged 62% from its peak.
To be clear, Archer Aviation is a high-risk, high-reward investment with a binary outcome. If the eVTOL specialist can secure Federal Aviation Administration (FAA) certification for its Midnight electric air taxi and prove it can manufacture its aircraft at scale, the stock could fly much higher. On the other hand, if it fails to live up to expectations, the high flyer could crash and burn.
Let the buyer beware.
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Danny Vena, CPA 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.
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