Archer Aviation (ACHR)
Pre-Revenue, majority spend in R&D.
Lot of dilution (likely to continue at double digits each year if not more) due to equity funding for R&D, still has about $325 Mn in net cash a year worth of expenses.
Positives include a $140Mn DoD contract, plus scope to expand in India and the middle east. United Airlines even though it is a large strategic partnership, it is non-binding – so difficult to predict what might transpire.
Also, an ongoing effort to reduce expenses to stretch cash a couple of years.
Biggest negative/challenge is getting certification and there is a milestone for 2024 testing so let’s see how that goes.
Interestingly, if eVTOL (Vertical take-off of aircraft) gets a mandate it would be a massive market.
Closest competitor among many is Joby is at a similar position developmentally and operationally, their ongoing testing program has a likely 6 to 12-month lead over Archer Aviation with successful flights in NYC, but Archer should be able to close that.
JOBY’s key supplier relationship with Toyota is a big plus.
ACHR’s primary focus is on manufacturing and selling eVTOL aircraft, while JOBY’s business model is more full stack, creation and operational management, thus Joby’s valuation is stronger.
Bottom line – speculative volatile play for sure + definite dilution, but if successful could be huge. I’m sure your position would be small relative to the portfolio, and as long as you can deal with the volatility nothing wrong in accumulating but do keep an eye out on JOBY, the Toyota angle looks interesting.
