Is Archer Aviation a million dollar stock?

Picture this: you’re stuck in endless traffic, taking what seems like an eternity to get to your destination. Now imagine pulling off the highway, parking your car, and calling a Uber — but the arriving vehicle isn’t a car, but a drone-like aircraft that whisks you quickly to your destination.

Such futuristic flying taxis, also called electric vertical take-off and landing (eVTOL) aircraft, have been developed and are currently being tested — and could soon be coming to a city near you. Archer Aviation (ACHR 2.29%)with its cutting-edge Midnight aircraft, is among the companies launching this innovative mode of transport.

The company is making significant progress and looks forward to regulatory approval to continue commercial operations. This development has sparked excitement about the future of transportation, and investors may be wondering: Could buying Archer Aviation today finally make me a millionaire?

Image source: Archer Aviation.

Archer Aviation is making significant progress

Archer Aviation is one of the few companies developing eVTOL technology that could change urban transportation as we know it. Midnight’s aircraft can maneuver similarly to a helicopter, but can also fly using its wings to provide portability like traditional airplanes. And unlike helicopters, eVTOLs use electric motors, making them an efficient, quieter mode of transport suitable for urban travel.

In June, the company completed a transition flight of its Midnight vehicle. During this flight, the vehicle took off vertically, accelerated forward, transitioned from thrust to wing-like flight like an airplane, then decelerated and landed vertically. This successful test was an important milestone that validated the craft’s concept and operability.

Archer still has work to do to reach commercial operations. First, Midnight must receive type certification from the Federal Aviation Administration (FAA), which is expected in late 2025. This would pave the way for commercial operations to begin.

It recently signed a memorandum of understanding with Southwest Airlines to develop operational plans for electric air taxi networks at California airports. It also unveiled plans for an air mobility network in Los Angeles; its goal is to start its network operations by 2026.

Is Archer a millionaire stock?

To gauge whether this stock has millionaire potential, zoom out and consider the big picture over the next few decades.

Let’s say you make a $10,000 investment in Archer. If you pay around $3.10 per share (close to its recent prices), you’ll get 3,226 shares of Archer. For your position to reach a value of $1 million, the stock price would have to reach $310 – a 100-fold increase.

Assuming the company does not dilute its shareholders (which it is likely to do, as it will need funds to accelerate its growth), Archer’s market cap should also grow 100x from its current 1 ,$15 billion to $115 billion.

Next, you need to determine how it would make sense to value the company. Will investors view it as a peer to Uber, which now trades at 3.8 times sales? Or more like a rival of Delta Airlineswhich is trading at 0.5x sales? Archer would need between $30 billion and $230 billion in revenue to achieve valuations in those ranges. The company is currently ahead of revenue.

However, assuming Archer begins commercial operations, analysts expect it to earn $190 million in revenue in 2026. If its stock were to be valued comparable to Uber’s based on projected 2026 revenue, the top line of Archer would need to grow at a compound annual rate of 29.% over the next two decades to bring it up to par, and that’s assuming some generous assumptions.

A lot will have to go right

Morgan Stanley projects that the flying taxi market could grow to a value of $1 trillion a year by 2040 and $9 trillion by 2050.

However, the market is still unsettled and success will largely depend on whether or not the public accepts the technology and comes to the conclusion that it is safe. It will take time for air taxis to gain momentum on a commercial scale, and breakthrough innovations tend to take much longer to reach mainstream adoption than enthusiasts expect.

In investing, you don’t want to put too much of your assets into one stock. Instead, the prudent course is to hold a diversified basket of stocks and take a long-term buy-and-hold approach, looking five to 10 years ahead. Focus on adding money to your investments consistently, growing your portfolio and diversifying your investments into stocks with different attributes.

Archer could be a piece of the puzzle for you. But it should be a small piece if you buy it today, given the speculative nature of the business and that commercial operations and cash flow positive operations are still a long way off.