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tesla The stock has been a big winner since listing in 2010, having risen by a mind-boggling 27,443%!
In fact, shares of the electric vehicle (EV) pioneer are up 35% in the past month alone. However, that's not a patch. archer aviation (NYSE: ACHR), whose stock price rose a whopping 91% in November alone.
I mention this relatively unknown company because, like a young Tesla, it strives to revolutionize transportation through electrical innovation. However, in comparison, this late-stage startup is a minnow. Its market capitalization is just $2.5 billion compared to Tesla's $1.1.trn.
Still, it clearly excited some investors. So could buying Archer stock be like investing in Tesla in 2010? Let's discuss.
What are you doing?
Archer Aviation is developing an electric vertical takeoff and landing (eVTOL) aircraft called Midnight for urban travel. In other words, an electric flying taxi that is quieter and more environmentally friendly than a helicopter.
It is designed to carry four passengers and a pilot and cruise at speeds of up to 150 mph. The goal is to reduce travel times and eliminate traffic jams in the world's most congested cities.
For example, Archer plans an air taxi network in Los Angeles that would replace one- to two-hour trips with 10- to 20-minute flights. It would be a transportation service similar to Uber.
Additionally, Archer sells its aircraft directly to third parties. It recently signed a planned $500 million purchase agreement with Japan Airlinesraising its aircraft order book to over $6 billion.
The company is backed by the automobile giant. Stellarwhich is helping to make the Midnight plane.
A new form of transportation
Last month, the Federal Aviation Administration (FAA) approved eVTOLs and presented a final set of safety rules. This is the first new category of aircraft overseen by the FAA since helicopters were introduced in the 1940s.
So this now seems less a question of whether when These flying taxis transport passengers.
But how long exactly? Well, this is where the uncertainty comes in. The company is still working on the certification process for the aircraft. It's on track to finish this by early 2026, but there could still be setbacks.
It is also scheduled to launch commercial air taxi services in the UAE starting in the fourth quarter of 2025. So that is still at least a year away.
lose money
Archer generated no revenue and posted a net loss of $115.3 million in the third quarter. However, it ended the quarter with $500 million in cash and could soon receive another $400 million from Stellantis. So you have enough cash for now.
However, it plans to increase production to two planes per month by the end of 2025. So it will almost certainly need to raise more money at some point, which could dilute shareholders.
The next Tesla?
I have shares of the rival eVTOL Joby Aviationas I believe its partnership with Uber and vertically integrated model could give it a competitive advantage over Archer. Joby shares are up 47% so far in November.
But both stocks are very high risk and are not certain to generate Tesla-style returns. Another eVTOL startup, Germany's Lilium, has just gone bankrupt.
However, Morgan Stanley predicts this urban air travel market will reach $1 trillion by 2040. Archer offers investors a compelling entry point into this potentially transformative industry.
That said, I think owning both stocks is too risky, so I'm sticking with Joby for now.
