Soaring 228% in 2023, ArcherAviation(NYSE: ACHR) stock made impressive progress toward regaining the altitude it had lost after its debut on the public markets in 2021. Sadly for Archer investors, however, the momentum hasn't extended into 2024, and shares of the electric air taxi stock have plummeted 43% during the first six months of the year -- an especially disconcerting development, considering the S&P 500 raced more than 14% higher during the same period.
But that's not to say that Archer, a developer of electric vertical takeoff and landing (eVTOL) aircraft, can't transcend the turbulence that it has recently encountered. Let's take a look at some things that could provide lift to the stock and help it find bluer skies.
No clear cause for the bumpy flight
Those with Archer stock on their radars are surely looking for the cause behind its tumble during the first half of the year. The irony, however, is that there wasn't a noteworthy reason for the decline. Instead of the company announcing a hiccup that would mean a delay in the rollout of its air taxi service, it's likely that the stock's decline stemmed from investors taking profits after shares soared last year.
Actually, management reported several positive developments that occurred since the start of the year. For one, the company continued to receive support from manufacturing partner Stellantis(NYSE: STLA). Spreading its wings beyond ground vehicles, Stellantis is working with Archer to build its Midnight eVTOL aircraft, and it has repeatedly invested in Archer -- most recently with a $55 million investment in early July to help the company along while it's in the pre-revenue phase of its development. Additionally, Archer reported that it has made steady progress toward obtaining the requisite FAA certifications for its Midnight aircraft.
What could contribute to smoother sailing in the coming months
With the company setting a target of commencing commercial operations in 2025, investors would likely bid the stock higher if the company affirms that Archer remains on schedule to meet this milestone. This would include the company continuing to complete test flights. For context, the company has completed more than 100 test flights in the first quarter of 2024 and plans on completing 400 test flights in total by the end of this year.
Another catalyst for the stock would be news that it has received FAA Type Certification for the Midnight aircraft. Developing innovative eVTOL aircraft such as the Midnight requires extensive testing and certifications from the FAA. While Archer announced receipt of the Part 135 Air Carrier & Operator Certificate from the FAA in June, allowing it to operate as a commercial airline, Archer still must receive Type Certification, demonstrating that the Midnight is airworthy and meets all safety, emissions, and noise standards.
In addition to providing air taxi service directly to customers, Archer plans on selling its aircraft to other companies. At the end of 2023, Archer reported an order book worth up to $3.5 billion, which includes a deal with UnitedAirlines(NASDAQ: UAL) to purchase up to $1.5 billion worth of Archer's aircraft. Should the company announced additional deals with other operators, adding to its order book, investors would likely find news of this sort encouraging and send the stock higher.
Is now a good time to fly with Archer Aviation stock?
While the first half of the year had been a disappointment for Archer investors, it's important to recognize that the stock's decline doesn't stem from concerning news. Instead, the stock's volatility is more a feature of young public companies that are in the pre-revenue phases of their developments.
In fact, Archer has made significant progress toward its goal of commencing commercial operations in 2025, and growth investors who are comfortable riding out some near-term volatility -- and who aren't averse to a higher degree of risk -- should certainly investigate the stock further to see if it's a right fit for them.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
