Archer Aviation stock nears key price as eVTOL hype continues

Archer Aviation (ACHR) is a company aiming to disrupt the transportation industry by building electric vertical take-off and landing (eVTOL) aircraft. It hopes to be a leader in a sector that will help to reduce carbon emissions and improve lifestyles by helping customers avoid traffic jams in major cities.

Established in 2018, the company has spent billions of dollars in Research & Development (R&D) ahead of its commercialization phase. It raised funds when it went public through a SPAC merger in 2021, and most recently, it has received funding from Stellantis, the parent company of Chrysler and Jeep. 

As part of its deal, Stellantis will also fund its manufacturing and then be compensated through new stock issuance. The company has received big orders and regulatory clearances as it prepares for commercialization in 2026.

The Archer Aviation stock was trading at $5.1 on Wednesday, up by 81% from its lowest level this year. Its HypeIndex gauge rose to 97%.

Positive hype

• Archer Aviation and other eVTOL stocks jumped after receiving a bullish statement from an analyst at Needham, who pointed that the FAA will give its initial clearance in the coming months. The FAA is interested in clean air taxis in the US.

• The analysts believe that these companies will generate as much as $3 billion in annual revenue in the short term. He then initiated his coverage of Archer Aviation with a buy rating.

• The company has a strong balance sheet with over $500 million in cash, which it will be enough for development ahead of its commercial launch. It is also raising $400 million for its midnight development from Stellantis.

• Its relationship with Stellantis is great since the latter has many years of experience in the manufacturing industry. 

• The company has continued to ink partnerships ahead of its official launch. It recently inked a partnership with Japan Airlines and Sumitomo Corporation, which will buy its aircraft worth $500 million. Their goal is to help customers navigate some of the most congested cities in Japan.

• Archer Aviation has made substantial plans to scale its business over time. For example, it has a large factory in Georgia that will be capable of churning 650 aircraft a year. 

• It has also made plans to launch its products in other countries like Brazil and the United Arab Emirates.

• Archer Aviation stock is significantly cheaper than the average analyst estimates of $9.28, implying a 81% upside.

Negative hype

• Archer Aviation has been a highly dilutive company over time as its outstanding shares jumped from 50 million in 2021 to over 383 million today. This dilution will continue, especially after its deal with Stellantis.

• Archer Aviation is an industry that is yet to be tested and it is unclear whether there will be demand for its services over time. 

• It faces substantial competition from the likes of Joby Aviation and Volocopter. 

• The company is still burning cash as evidenced by the last financial report, which showed that ts net loss jumped to $115 million in the last quarter. 

• There are chances that its commercialization process will take time since it is building a new manufacturing process. 

Archer Aviation stock analysis

The daily chart shows that the ACHR stock has some positive technicals. It has rallied above the 50-day and 200-day moving averages and is about to form a golden cross pattern. It has also formed a cup and handle pattern, while the Relative Strength Index (RSI) and the MACD indicators have continued rising. 

The stock has also formed a cup and handle pattern, which is a popular continuation sign. Therefore, there are odds that the stock will jump to over $9 in the coming weeks. This view will be confirmed if the stock rises above the key resistance level at $5.45, its highest level on July 16.

If you’d like to receive more trending stocks straight to your inbox, check out our premium plans. Alternatively, if you’d like to hear more about the services offered by HypeIndex, you can check out our FAQ page.

HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.