With Archer Aviation (ACHR) making significant, impressive inroads into East Asia and looking well-positioned to generate a great deal of revenue from the Pentagon over the longer term, ACHR stock continues to look attractive for long-term investors.
Moreover, the eVTOL maker should benefit from its launch in Southern California and from the Trump Administration’s strong commitment to the sector.
In light of all of these points, long-term investors should consider buying the shares.
Meaningful Inroads Into Asia
Speaking on Archer’s third-quarter earnings call held on November 6, CEO Adam Goldstein noted that Korean Air, South Korea’s biggest airline, had “selected Archer as its exclusive air taxi partner in the country.” Further, Tokyo recently picked a group, spearheaded by Archer and Japan Airlines, as one of two consortiums that will provide air-taxi service in the city, Goldstein noted.
Since Archer is partnering with large airlines in both South Korea and Tokyo, the American company will almost certainly have the necessary funds to create the physical and marketing infrastructure that it needs to succeed in both countries. Also making me upbeat about Archer’s prospects in South Korea and Japan is the fact that the two countries’ largest cities, Seoul and Tokyo, are both extremely crowded and suffer from a great deal of traffic. As a result, I expect the demand for air taxis in both cities to be quite strong.
Also importantly, Archer’s footholds in Japan and South Korea could very well help it expand to other nations in the region, such as Vietnam, Australia, and the Philippines.
Revenue From the Pentagon and Southern California
Among the military missions that eVTOLs or VTOLS (vertical take off and landing aircraft that don’t use electricity) can undertake are “surveillance, logistics, and reconnaissance missions,” TechCrunch reported. Goldstein, during the firm’s second-quarter earnings call held on August 11, suggested that Archer’s aircraft would have low thermal footprints and make little noise compared with helicopters. These attributes would certainly be assets for many military missions.
Also encouragingly, Goldstein reported that, after speaking with sources in “the global defense industry,” including Secretary Pete Hegseth, he is convinced that “defense is positioned to become a strategic pillar of (Archer’s) business.”
In other words, Goldstein is strongly suggesting that the company is very well-positioned to get a large amount of funds from the Pentagon and perhaps U.S. allies as well over the long term.
In Southern California, Archer has acquired Los Angeles’ Hawthorne Airport which will give the company a sizable base from which to launch and carry out air-taxi services in the region. This move should give Archer a material advantage over other potential air-taxi providers in the region. And because Southern California is notorious for its horrible traffic and has a significant number of very wealthy people (think Beverly Hills), the demand for air taxis there could be very strong in the area.
Pro-eVTOL Environment and the Valuation of ACHR Stock
The Federal Aviation Administration announced in September that it would seek to create public-private partnerships involving eVTOLs. In addition to these partnerships potentially helping Archer, the Administration’s effort in this area shows that it is backing eVTOLs. The government’s backing should prove very valuable for Archer and its peers over the longer term.
Archer’s current market capitalization of $6.2 billion does not come close to reflecting its potential positive catalysts and long-term potential. Consequently, I believe that its valuation is quite attractive.
*This article is intended to be informational only; it is not financial advice
