Why Archer Aviation Stock Just Popped

Shares of electric vertical takeoff and landing aircraft manufacturer and air taxi start-up Archer Aviation (NYSE: ACHR) soared higher in Friday morning trading, and were up by 10.4% as of 10:55 a.m. ET.

Shareholders can thank the friendly analysts at Cantor Fitzgerald for the lift.

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Why Cantor loves Archer

In a note out Friday morning that was covered on StreetInsider.com, Cantor Fitzgerald analyst Andres Sheppard doubled down on his overweight (i.e., buy) rating and $13 price target for the air taxi company. Archer has reaffirmed its plans to launch an air taxi service in the fourth quarter of 2025, and Sheppard believes the United Arab Emirates will be the first market it debuts in.

Sheppard further highlighted as attractive Archer's "highest in the industry" cash reserves of $1 billion, and its large number of partnerships, which include privately held defense contractor Anduril, the U.S. Department of Defense, United Airlines, and car manufacturer Stellantis.

Is Archer Aviation stock a buy?

Archer's business isn't viable yet. The company reported $514 million in losses over its last four quarters, and burned $450 million in cash. Still, even at such a brisk cash burn rate, it has enough cash on hand to keep it alive for two more years -- and if it starts air taxi operations and begins generating revenue and cash flow just six months from now, its situation could improve.

The question for investors is whether it will improve fast enough. Right now, the consensus expectation among analysts polled by S&P Global Market Intelligence is that Archer won't earn GAAP profits before 2030, nor generate positive free cash flow before 2028 -- which is more than three years away.

The company's on track to run out of money before that happens. The stock therefore remains speculative. If you still want to buy shares, I'd advise that you buy small and limit your risk.

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Rich Smith has positions in Stellantis. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.