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Archer Aviation(NYSE: ACHR) is an innovative flying taxi company that could revolutionize urban travel. Imagine effortlessly soaring over city traffic in an electric drone-like aircraft, whisked away to your destination in record time. It's the future and could be closer than you think.
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According to Morgan Stanley, the urban air travel industry could grow into a $9 trillion market by 2050. As cities grow and traffic congestion worsens, demand for aerial transportation will inevitably surge. The question is: Can Archer Aviation seize this opportunity and provide life-changing wealth? Let's examine the company to find out.
Archer Aviation looks to reimagine transportation with its Midnight aircraft
Archer is one of the leading companies working on electric vertical takeoff and landing aircraft (eVTOL). These aircraft hover vertically and can operate in small spaces. Also, their electric motors are powered by modern battery technology, allowing them to operate quieter than helicopters with less pollution, making them ideal for urban transportation.
Archer has been developing its aircraft since 2018 and has made huge strides in getting them commercially operational. Earlier this year, its flagship Midnight aircraft performed a successful transition flight, where it soared vertically, then transitioned from hovering to flying like a typical fixed-wing aircraft. After reaching speeds of over 100 miles per hour, it returned for a smooth vertical landing.
What's next for Archer
Several steps are left before eVTOL operators achieve commercial operations and, more importantly, start producing steady revenue.
Archer is making significant strides in its certification process, having completed three of the four required steps. This certification is crucial, since it will confirm that the Midnight eVTOL has met rigorous safety standards and will pave the way for commercial flight operations. The company anticipates receiving the certification by late 2025.
In addition to type certification, Archer is also pursuing production certification, which will enable the large-scale manufacturing of its Midnight aircraft. With a factory in Georgia, Archer plans to produce up to 650 aircraft annually, with production projected to commence in 2025.
The preparation for air taxis is underway. Archer is partnering with Southwest Airlines to map out electric air taxi networks at California airports served by Southwest. And it is collaborating with Signature Aviation to electrify 200 airports across the U.S.
Archer expects to roll out its Los Angeles air mobility network by 2026 while also seeking international expansion, with operations in the United Arab Emirates set to begin as early as 2025.
Can Archer Aviation set you up for life?
Archer's innovative aircraft could revolutionize urban transportation.
As a pioneer in the industry, Archer stands to benefit from a first-mover advantage as it transitions from concept to manufacturing and eventually to large-scale commercial operations. However, the company is still pre-revenue, and positive cash flow is years away.
The growth story will take years or even decades to play out, making it best for extremely patient investors with a long time horizon. Its significant upside potential comes with a lot of execution risk around this new form of travel that may take time before it has mainstream acceptance, leaving the stock vulnerable to volatility along the way.
If you're looking to build a position in Archer today, a wise approach is to start small and gradually add to it over time, making sure it is part of a well-diversified portfolio. In this scenario, you could benefit from the company's potentially explosive growth. And if it fails to take flight, at least you'll have your other investments to fall back on.
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Courtney Carlsen has positions in Morgan Stanley. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.
