The race to develop electric vertical takeoff and landing (eVTOL) aircraft has undergone a dramatic consolidation since its emergence around 2010. What began as a crowded field with hundreds of competing aircraft designs has been winnowed down significantly as the technical and regulatory hurdles became apparent.
However, the culling of the herd truly came down to one critical factor-capital. The immense funding requirements of developing an entirely new form of aviation, estimated in the billions of dollars per program, have proven too steep for all but the most resourceful companies.
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Archer Aviation (ACHR 8.72%), an American eVTOL leader, has excelled at fundraising since its inception, putting it in an enviable position as the industry as a whole steadily marches toward commercialization. Here’s why Archer Aviation’s latest funding round eliminates a key risk for investors and sets the stage for potential share price appreciation.
Securing the future
Archer’s latest funding round, a $301.75 million capital raise at $8.50 per share, brings total liquidity to approximately $1 billion. This strategic financing, which included significant participation from BlackRock-managed funds, substantially fortified what was already one of the strongest balance sheets among public eVTOL companies.
At current quarterly burn rates, this war chest provides Archer with an approximately two-year operational runway. More significantly, this capital raise probably represents one of Archer’s final dilutive offerings, eliminating a persistent overhang that has historically constrained the stock’s valuation.
Capital strength and path to profitability
While numerous eVTOL designs have succumbed to financial constraints or been absorbed by stronger players, Archer has demonstrated remarkable capital management through multiple economic cycles. This nearly unparalleled ability to raise funds on demand has emerged as the company’s defining competitive advantage in an industry where mere entry requires billions in investment.
This capital advantage has enabled Archer to maintain an aggressive path to market leadership. According to S&P Global Visible Alpha consensus data, the company is projected to become a leader in the U.S. public eVTOL market in direct aircraft revenue, reaching over $2 billion in sales by 2029.
Archer’s production trajectory, scaling from 33 aircraft in 2026 to 465 units by 2030 per Alpha Vision, creates a clear path to positive cash flow by perhaps 2027. By comparison, rival Joby Aviation is projected to hit just 56 units by 2030 by Alpha Vision, highlighting Archer’s ambitious production ramp-up.
Military horizons
CEO Adam Goldstein has identified defense applications as an increasingly substantial opportunity, citing mounting military interest in next-generation vertical lift capabilities. This vision recently gained powerful validation through an exclusive partnership with Anduril, one of the world’s most innovative defense technology companies, to jointly develop hybrid VTOL aircraft for military applications.
The partnership combines Archer’s expertise in rapid VTOL development with Anduril’s deep artificial intelligence and systems integration capabilities, targeting potential Department of Defense programs. Beyond defense applications, Archer has a growing order book for civilian aircraft through multiple landmark deals, such as its joint venture with Soracle Corporation in Japan. This single deal represents an order for up to 100 Midnight aircraft.
Time to buy?
Archer’s preliminary fourth-quarter 2024 non-GAAP operating expenses are tracking within management’s guidance of $95 million to $110 million, showing the kind of fiscal discipline rarely seen in the capital-intensive eVTOL space. The company has also hit multiple key milestones on schedule, from FAA certification progress to the completion of its ARC manufacturing facility in Covington, Georgia.
In an industry that began with hundreds of aspirants, Archer Aviation has emerged as a preeminent force among publicly traded eVTOL companies in the U.S., distinguished by its fortress balance sheet, remarkable execution, and a clear path to market in the defense and civilian arenas. With dilution risk largely mitigated and a credible trajectory to profitability ahead, Archer appears exceptionally well positioned to reward patient investors as it advances toward transforming urban air mobility from concept to reality.
George Budwell has positions in Archer Aviation, BlackRock, and Joby Aviation. The Motley Fool has positions in and recommends S&P Global. The Motley Fool has a disclosure policy.
