Archer Aviation Inc (NYSE: ACHR) is an electric vertical take-off and landing aircraft manufacturer committed to revolutionising urban air travel.
The eVTOL company has a sizable opportunity in front of it considering Morgan Stanley expects the urban air travel market to be worth $9 trillion by 2050.
But is Archer Aviation stock fairly positioned to win a significant chunk of this market and prove to be a millionaire maker in the coming years?
Let’s explore.
Archer insiders remain bullish
Archer stock has close to tripled over the past two months as it continued to execute on its commercialisation efforts.
Despite the sharp surge, insiders continue to load up on Archer stock. Its director Deborah Diaz, for example, bought more than 5,000 shares of ACHR this week.
She now owns a total of 98,885 shares, which suggests Archer executives continue to see long-term potential in the ability of their company’s electric vertical take-off and landing aircraft to revolutionise urban travel.
And for good reason too. Archer Aviation has already secured orders from United Airlines in the US.
Other countries that have partnered with this New York listed firm include India, South Korea, and the United Arab Emirates.
Most recently, Archer announced a $500 million deal with Soracle to bring its futuristic eVTOLs to Japan.
Why may ACHR fail to make you a millionaire
If you were to invest $10,000 in ACHR today, you will get some 1,110 shares of the eVTOL company.
For your investment to eventually be worth $1 million, Archer stock price would have to surpass $900.
That translates to about a 100-fold increase – and a corresponding surge in market cap would value Archer Aviation at more than $300 billion.
Now, let’s assume the market will see Archer stock as similar to Uber that typically goes for about 3.8 times sales and not like Delta Airlines that commands a sales multiple of 0.5 only.
That would still require Archer Aviation to hit $80 billion in annual revenue to be worth over $300 billion – which looks lightyears away for now considering the company is yet to report any revenue at all.
Expectations are for Archer’s revenue to print at $190 million in 2026.
So, it would take ACHR another 24 years after that to hit $80 billion in revenue even if it grew the metric at a whopping 49%.
Most importantly, the above mentioned are generous assumptions that don’t even account for stock dilution that Archer will most definitely have to turn to in its pursuit of growth.
Archer stock could still be promising
Archer Aviation uses modern battery technology that makes its eVTOLs quieter and a lot more efficient than helicopters.
The NYSE listed firm expects to receive type and production certifications by the end of next year as well.
Still, the idea of counting on it to make you a millionaire is a bit too far-fetched.
After all, ACHR is pre-revenue at writing, which means it still has a lot to proof.
Nonetheless, if the company’s management continues to execute well, chances are that Archer Aviation stock will continue to deliver healthy returns in the coming years, even if they don’t make you a millionaire.
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