Archer Aviation(NYSE: ACHR), a builder of electric vertical take-off and landing (eVTOL) aircraft, went public by merging with a special purpose acquisition company (SPAC) on Sep. 17, 2021. Its stock opened at $9.40 on its first day but sank to an all-time low of $1.63 on Dec. 27, 2022 as it missed its pre-merger estimates, and rising interest rates squeezed its valuations.
But Archer's business stabilized as it delivered its first aircraft and secured new partnerships, and its stock closed at a new record high of $13.30 per share on May 16, 2025. It's pulled back about 24% since then, but I think it could still be a great stock to buy and hold forever.
Image source: Archer Aviation.
Why does Archer have a lot of upside potential?
Archer's Midnight eVTOL aircraft can carry one pilot and four passengers, travel up to 100 miles on a single charge, and fly at a maximum speed of 150 miles per hour. It promotes the Midnight as a cheaper and greener alternative to traditional helicopters, and it's easier to land in densely populated urban areas. That makes them well suited for short-range air taxi services.
Archer's top commercial customers include United Airlines, which ordered 200 aircraft; Future Flight Global, which ordered 116 aircraft; and Soracle (a joint venture between Japan Airlines and Sumimoto), which placed an order for 100 aircraft. It's secured additional air taxi deals with Ethiopian Airlines and Abu Dhabi Aviation, and it plans to launch its own first-party air taxi service within the next two years.
Archer also holds contracts worth up to $142 million with the U.S. Department of Defense (DoD); it's working with the automaker Stellantis to produce its own branded eVTOLs; and it partnered with Palantir this March to accelerate its own production and strengthen its aviation systems with its AI services.
Why is Archer a difficult stock to value?
Archer has a market cap of $6.4 billion, but it hasn't generated any meaningful revenue yet. That makes it a tough stock to value and an easy target for short sellers.
Archer delivered its first Midnight to the U.S. Air Force (USAF) last August, but that variant version of its aircraft didn't generate any direct revenue and was only used for testing purposes. It's contracted to deliver up to five more Midnight aircraft to the USAF over the next few years.
Archer can't ramp up its deliveries in the U.S. until it competes the Federal Aviation Administration's (FAA's) five-phase certification process: conceptual design, requirements definition, compliance planning, implementation, and certification. It's already on the fourth phase and expects to clear the final phase to certify its aircraft this year.
If the FAA certifies its Midnight aircraft, Archer plans to ramp up its deliveries and gradually start its U.S. air taxi services by the end of 2025. It will also continue the deployment of its air taxi services in Abu Dhabi, where it faces fewer regulatory hurdles.
Archer then aims to increase its annual production to 10 aircraft in 2025, 48 aircraft in 2026, 252 aircraft in 2027, and 650 aircraft in 2028. Stellantis, its top investor, will support that expansion with its cash and manufacturing capabilities.
The bulls believe that by 2028, Archer's Midnight aircraft will have established an early mover's advantage in the nascent air taxi market. It was already selected as the official air taxi provider for the Los Angeles Olympics in 2028, and that increased brand visibility could attract more commercial customers. Archer also believes its own first-party air taxi service will eventually cost about the same as Uber's premium UberBlack service.
Why could it be a great stock to buy and hold forever?
Archer is a risky and speculative stock. It won't turn a profit anytime soon; it will take on more debt to fund its expansion; and it will keep diluting its investors with more secondary offerings. However, analysts expect Archer's annual revenue to rise from $13 million in 2025 to $437 million in 2027 if it successfully ramps up its production.
A lot of Archer's near-term growth has already been baked into its shares at 15 times its projected sales for 2027, but the eVTOL market could grow much larger over the next decade. According to Markets and Markets, the eVTOL market could expand at a compound annual growth rate (CAGR) of 35.3% from 2024 to 2030, and keep growing at a CAGR of 27.6% from 2031 to 2035.
If Archer stays at the top of that blooming market, it could expand and evolve into an aviation giant over the next decade. So as long as you can tune out the near-term noise about tariffs, geopolitical conflicts, and other macroheadwinds, it looks like a great stock to buy and hold forever.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies and Uber Technologies. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
