Why Archer Aviation Stock Soared This Week

Archer Aviation (NYSE: ACHR) stock saw strong gains over last week's trading. The company's share price closed out the stretch up 13% from the previous week's market close, according to data from S&P Global Market Intelligence. Over the same period, the S&P 500 index rose 1.7%, and the Nasdaq Composite index was up 0.6%.

President Trump's inauguration earlier this week kicked off gains for the broader market, and Archer Aviation benefited from the rally. In addition to gains for the broader market, the stock got a boost from excitement surrounding the company's defense industry initiatives.

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Archer Aviation stock gets bump from Trump

President Trump was formally inaugurated and returned to office on Jan. 20. While the stock market was closed that day because the inauguration fell on the federal Martin Luther King Jr. holiday, stocks saw strong gains in Tuesday's trading. Archer Aviation and many other growth stocks enjoyed particularly pronounced gains.

Many investors expect that the new Trump administration will reduce regulations across various industries and usher in other pro-growth policies, and stocks have gotten a boost in conjunction with the sentiment. Archer Aviation stock also saw a business-specific catalyst over the last week.

On Jan. 22, the company published a press release announcing that retired Lieutenant General Scott Howell had joined its advisory board. Howell will be providing insight and support for Archer Defense -- the company's newly formed defense unit concentrated on making next-generation aircraft for military applications.

What comes next for Archer Aviation?

Archer Aviation's business is still in a pre-revenue state, but the company has exciting growth opportunities in both the commercial flight and defense markets. The company is ramping up manufacturing operations to produce its Midnight flying electric vehicles for the commercial market, and it announced late last year that it had partnered with Anduril to create hybrid-power aircraft for the defense industry.

Pending the necessary regulatory approvals, it looks like commercial flights for Archer's Midnight crafts will begin this year. If so, the company will likely quickly shift from having zero sales to posting rapid revenue growth. Archer says it already has more than $6 billion worth of customer orders for its Midnight vehicles. Sales wins for the defense industry could take longer to emerge, but contract wins for the Department of Defense could wind up being an explosive catalyst for the stock.

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Keith Noonan 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.