Stock Market

Archer Aviation Stock: Aim for the Skies, But Have an Exit Parachute Ready

Archer Aviation (NYSE:ACHR) stands out as an early mover in a high-potential industry. Consequently, the sky is the limit for ACHR stock — but then, it could also have a crash landing. Even if you strongly believe in Archer Aviation’s future prospects, you’ll definitely want to have an exit strategy in place.

Archer Aviation manufactures flying taxis, more formally known as electric vertical takeoff and landing (eVTOL) aircraft. Someday, the skies could be filled with these flying vehicles. There are no guarantees, however, so it’s wise to hedge your bets with Archer Aviation stock.

Archer Aviation’s Forward-Looking Strategy

In terms of its adoption curve, the eVTOL industry has similarities with the electric vehicle (EV) market. To facilitate faster and wider adoption, it certainly helps if there’s an interoperable vehicle charging system in place.

Clearly, Archer Aviation’s management understands this concept. The company announced that it “purchased several units of” BETA Technologies’ “interoperable and multimodal fast-charging system” for eVTOL aircraft.

According to the press release, this charging system “employs the Combined Charging Standard (CCS) utilized by top original equipment manufacturers (OEMs) in the electric aviation industry.” Currently, BETA Technologies’ charging systems are in use at 14 locations in the eastern region of the U.S.

The skeptics might say that these are just baby steps. That’s a fair assessment, but it’s a start, and it’s encouraging to see Archer Aviation taking the initiative. Over time, the company could be a pioneer in developing an interoperable fast-charging system for eVTOL aircraft.

ACHR Stock Is a Wager on International eVTOL Industry Development

If you’re going to invest in Archer Aviation stock, there are certain things you need to be aware of. Notably, Archer Aviation operates at a financial loss. In fact, the company reported a GAAP-measured net earnings loss of $51.6 million in 2023’s third quarter.

In other words, ACHR stock involves certain risks. Investors will have to hope that the flying taxi industry develops quickly over the next few years. Otherwise, Archer Aviation could dig itself into a deep financial hole that the company can’t get out of.

On the other hand, Archer Aviation could generate significant revenue from certain regions of the world. In particular, Archer Aviation has ambitions to bring eVTOL aircraft to India and the United Arab Emirates (UAE) in 2026.

Don’t get the wrong idea. Archer Aviation also operates in the U.S. Indeed, the company secured an eVTOL manufacturing deal with the U.S. Air Force that will be worth up to $142 million for Archer Aviation. Still, it’s exciting to consider that Archer Aviation might blaze a trail for the flying taxi market on more than one continent.

Archer Aviation Stock: What’s Your Exit Plan?

If you’re going to fly in a small aircraft, it’s not a bad idea to have a parachute ready. Similarly, you’ll want to have an exit plan in place just in case Archer Aviation stock starts to crash.

The best hedging strategy is to simply take a very small share position in Archer Aviation. It’s also possible to purchase put options in order to limit your potential losses with ACHR stock.

Additionally, you can use a stop-loss strategy by determining a price at which you would sell your Archer Aviation stock if it crashes. Either way, just be sure to have a financial parachute ready if you choose to invest your hard-earned capital in Archer Aviation.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.