Is Archer Aviation Stock a Buy Before Its Q3 Earnings Report?

Archer Aviation (NYSE: ACHR) has never been ambiguous about what it wants: a fully certified air taxi. What's less certain, however, is when it will get there, how it will get there, and how much money it will spend to cross that finish line.

Every quarterly report, therefore, comes with the underlying question of when. And with its third-quarter earnings report slated for Nov. 9, investors will likely be looking for positive signs that the company is getting closer to that milestone.

In the meantime, is Archer stock worth buying before its next earnings report is released? Let's take a look.

What to watch for in Archer's Q3 results

Arguably, the biggest development in Archer Aviation this quarter has been its planned acquisition of three Boeing subsidiaries: Wisk Aero, Insitu, and SkyGrid. The deal, if it closes, gives Archer access to autonomous aircraft technology (Wisk Aero), airspace management software (SkyGrid), and an established defense business (Insitu).

Image source: Archer Aviation.

That last one is especially important. Insitu alone is expected to add more than $200 million in annual revenue to Archer's business. Considering that Archer generated just $5 million in revenue last quarter, the acquisition could literally transform Archer's financial picture overnight.

The cost of that acquisition, however, could also be significant: Boeing walks away from the deal with approximately 19.75% of Archer's pre-closing share count, subject to adjustments. That spells dilution for existing shareholders.

Of course, since the Boeing deal hasn't closed, Insitu's more than $200 million in annual revenue likely won't show up in Archer's third-quarter results. But it's worth considering now when evaluating Archer's future, especially since the eVTOL (electric vertical takeoff and landing) maker is likely to report substantial losses.

In the second quarter, Archer reported a net loss of $263 million, and for Q3, management expects adjusted EBITDA loss between $170 million and $200 million. Fortunately, Archer finished June with about $1.6 billion in cash and short-term investments, so it has some breathing room.

Should you buy Archer before it reports earnings?

At around $4 a share, Archer currently carries a roughly $3 billion market value. That's less than its rival Joby Aviation, which is valued at about $4.6 billion and has arguably made more progress toward FAA certification than Archer has.

For my part, I'm intrigued by Archer's defense opportunities, but I'm not expecting this quarterly report to be a spectacular show. I wouldn't, therefore, rush to buy Archer ahead of earnings. With its certification timeline still unknown, most investors will probably want to wait for more material progress before jumping in.

Steven Porrello has positions in Archer Aviation and Joby Aviation. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.