Why Archer Aviation Stock Is Skyrocketing Today

Source The Motley Fool

Shares of Archer Aviation (NYSE: ACHR) are rising on Tuesday. The company's stock gained 6.1% as of 12:50 p.m. ET and was up as much as 14.4% earlier in the day. The gain comes as the S&P 500 (SNPINDEX: ^GSPC) was flat, while the Nasdaq Composite (NASDAQINDEX: ^IXIC) lost 0.2%.

Archer Aviation, which develops electric vertical takeoff and landing (eVTOL) aircraft, announced today that it received an important certification from the Federal Aviation Administration (FAA).

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FAA certification lets Archer train pilots

The FAA granted Archer its Part 141 certification, formally recognizing and regulating the company's flight school, allowing it to officially launch its pilot training program. This is the third of four certifications required by the FAA to operate its commercial air taxi service -- the central goal of the company.

The certification is a major leap forward in the company's journey and means that it is now much closer to a full commercial launch. Launching the pilot training program will allow the company to have a cadre of trained pilots at the ready when the Archer receives the final green light from the FAA.

The certification also means that Archer is catching up to rival Joby Aviation, which has had a slight lead in development up to this point, receiving its Part 141 in December. Whoever is first to market is likely to enjoy an advantage over the other.

What's next?

Archer still has some regulatory hurdles to clear, but the company expects to receive full clearance by the end of 2025. The real challenge will be proving the economics of an air taxi service work in the real world and scaling manufacturing -- a capital-intensive task -- while properly managing its balance sheet.

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Johnny Rice 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.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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