Archer Aviation Faces Scrutiny Amidst eVTOL Innovation Journey

San Francisco, California – Archer Aviation Inc. is under scrutiny as it aims to transform urban transportation with its electric vertical takeoff and landing (eVTOL) aircraft. The company, with a market capitalization of approximately $5.83 billion, has been a frontrunner in the air taxi sector. However, challenges have arisen following a critical report from Culper Research.

On May 20, Culper Research released a report titled “Archer Aviation (ACHR): When You Can’t Earn Airtime in the Sky, Buy it on Late Night Television.” The report alleges that Archer systematically misled investors regarding the development of its flagship Midnight aircraft. It cites inconsistencies between employee communications, photos, and public statements about the eVTOL program’s progress.

In response, Archer’s management described the report’s claims as “baseless,” questioning the credibility of the short-seller. Despite the report’s impact, Archer’s stock price remained relatively stable but did experience an approximate 18% decline between May 19 and June 5.

Investors are advised to examine Archer’s financial reports for insights into its operating sustainability, given its operating losses of $144 million in the first quarter compared to $142 million the previous year. The losses stemmed from increased expenditures as the company moves closer to commercializing its Midnight aircraft. Archer also holds about $1 billion in cash, which could sustain its operations for around seven additional quarters if cash burn continues at the current rate.

In a bid to expand manufacturing capabilities, Archer has partnered with Stellantis to build a facility in Covington, Georgia, aiming to produce 650 aircraft annually. The partnership is predicted to facilitate the assembly of two Midnight aircraft per month by the end of 2025. Additionally, Archer has established relationships with clients like Ethiopian Airlines and Abu Dhabi Aviation, boosting future revenue prospects.

Despite these developments, uncertainty surrounds the delivery and commercialization of Archer’s aircraft, especially in light of allegations about progress discrepancies. Analyst David Zazula from Barclays acknowledges the ambitious vision presented by Archer but urges caution, maintaining a neutral rating on the stock with a price target of $4.50.

Overall, Archer Aviation remains a high-risk investment in a rapidly evolving sector, with potential rewards but equally significant uncertainties.