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Investors Business Daily
Investors Business Daily

Aerospace EV Maker Rallies 240% This Year: Cathie Wood Stocks Up

Archer Aviation is a little-known electric aircraft developer that has drawn big investments from industry giants including Boeing and United Airlines. The company says it is working to revolutionize air travel, developing technologies that have drawn the attention from ARK Invest CEO Cathie Wood, who purchased more than $30 million worth of shares in August. ACHR stock more than tripled this year as it gears up for takeoff in 2025.

Santa Clara, Calif.-based Archer Aviation produces electric vertical takeoff and landing (eVTOL) aircraft for urban environments, with the goal of creating a robust air-taxi service. Its flagship Midnight eVTOL received its Special Airworthiness Certificate from the Federal Aviation Administration on Aug. 16, which allows company to begin test flights. Archer plans to begin its piloted "for credit" flight testing in early 2024 to obtain Type Certification from the FAA.

The Midnight has space for an onboard pilot, plus four passengers and luggage. It claims a range of up to 100 miles, and says it is optimized to travel 20 to 50 miles.  The company hopes to enter the aircraft into service in 2025, once receiving approval from regulators.

However, the early-stage company has yet to make a profit and no earnings are expected for the next few years, FactSet data shows. Wall Street forecasts Archer to generate revenue starting in Q1 2024.

Archer Amasses Funds

On Aug. 10, Archer Aviation announced it secured a $215 million investment from Stellantis, Boeing, United Airlines and ARK Invest during its Q2 earnings results. The additional funding brings the company's total-to-date to more than $1.1 billion.

The investment included $70 million from Stellantis under a strategic funding agreement from January. Archer reported it had $55 million still available under the agreement as of Aug. 10.

Archer plans to use the funding for working capital, general corporate purposes and further development of its aircraft, tech, manufacturing and test facilities.

The company also reached an agreement with the Department of Defense worth up to $142 million in late July. Archer expects to deliver up to six of its Midnight eVTOL aircraft to the U.S. Air Force in late 2023 or early 2024.

Rivals include Eve Air Mobility, which was founded as a spinout of Brazil-based Embraer in 2017. Eve signed a partnership with Uber in 2017 to integrate its eVTOL aircraft into its Uber Elevate Network, its aerial ride-share program.

Eve also has an agreement to launch operations in San Francisco in 2026, the company said in June. United Airlines invested $15 million in the venture in 2022 with a conditional purchase agreement for 200 eVTOLs, plus an option for 200 additional aircraft.

Cathie Wood, ARK Invests In Archer

Cathie Wood's ARK Invest loaded up on Archer shares on Thursday and Tuesday, continuing the buying spree from August, according to ARK's daily trade updates.

ARK purchased 233,350 shares of Archer Aviation on Thursday worth $1.48 million based on the $6.37 closing price. The Archer shares were distributed among the Ark Innovation ETF, ARK Autonomous Technology & Robotics ETF and the ARK Space Exploration & Innovation ETF.

On Tuesday, ARK bought 41,825 shares of ACHR stock worth $264,752 based on the closing price of $6.33.

Cathie Wood and ARK purchased about 5.18 million ACHR shares worth roughly $31.26 million throughout August. The largest purchase occurred on Aug. 16 when ARK bought 2.69 million shares worth $16 million.

ACHR Stock

ACHR stock went public on the New York Stock Exchange on Sept. 17, 2021 via a SPAC merger with Atlas Crest Investment. Shares have soared more than 263% in 2023 through Friday's close.

A $5,000 investment into ACHR shares at the open on Jan. 3 would be worth about $17,108 as of Sept. 6, resulting in roughly a $14,405 profit, according to Investor's Business Daily analysis and MarketSmith data.

Archer shares jumped 6.8% Friday. The stock climbed 1% Thursday.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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