Archer Aviation Inc (ACHR)

Archer Aviation Inc. (ACHR): A Deep Dive

Company Profile:

History: Founded in 2018 as a merger of two companies, Zee.Aero (founded by Brett Adcock and Adam Goldstein in 2014) and VX4 (co-founded by Mark Moore in 2017), both focused on developing electric vertical take-off and landing (eVTOL) vehicles.

Core Business: Archer Aviation focuses solely on developing and producing eVTOL aircraft for various applications, including urban air mobility (UAM). Their flagship offering is Maker, a four-passenger electric aircraft.

Leadership Team:

• Founder & Chief Executive Officer: Adam Goldstein
• President: Mark Moore
• Chief Marketing Officer: Mary Pittman
• Chief Revenue Officer: John Moore
• Chief Operating Officer: Michael Griffie
• Chief Engineer: Tom Muniz
• Chief People Officer: Jennifer Langan
• Chief Technology Officer: Mark Douglass
• Chief Test Pilot and Vice President of Flight Operations: Matt Henry
• General Counsel & Corporate Secretary: Jeffrey S. Johnson

Corporate Structure: Publicly traded company (NYSE: ACHR), incorporated in Delaware with headquarters in Santa Clara, California.

Top Products and Market Share:

Product: Maker, an all-electric four-passenger aircraft designed for urban air mobility. It boasts a range of over 60 miles and a cruising speed of 150 mph.

Market Share: Currently, there are no commercial eVTOL aircraft in operation. Archer's pre-order book includes more than 500 aircraft reservations and 50 Letters of Intent for conditional purchases, with total potential value exceeding $3 billion. Their initial market share will depend on achieving first-to-market success and securing key partnerships.

Competitors: The eVTOL market is rapidly developing, with numerous companies vying for dominance, including:

• Joby Aviation (NYSE: JOBY): Targeting a 2024 commercial launch.
• Lilium (NASDAQ: LILM): Focusing on regional air travel with their 7-seat aircraft.
• EHang (NASDAQ: EH): Chinese company with autonomous eVTOL passenger drones.
• Beta Technologies (privately held): Developing eVTOL cargo aircraft for regional logistics.

Archer faces stiff competition, but its key differentiators include a focus on urban air mobility, an all-electric platform, and a proven track record in design and engineering.

Total Addressable Market:

The global eVTOL market has a predicted market potential reaching $4.3 trillion in value by 2035 according to Morgan Stanley. The U.S. market for urban air mobility, specifically, could reach $33 billion by 2050, based on estimates by consultancy Roland Berger. This market potential offers significant opportunities for Archer to grow and scale their business.

Financial Performance:

Archer is currently pre-revenue as they are in the development and testing phase of their aircraft. Their financials mainly reflect investments in research & development and administrative expenses. As of Q2 2023, Archer reported $75.2 million in cash on hand.

Growth Trajectory:

Despite no current revenue, investor confidence and growth expectations remain high. Since going public in September 2021, Archer has secured $623 million from United Airlines for 200 aircraft deliveries and an option for another 200. The company's recent partnership with Stellantis N.V. unlocks manufacturing capabilities and further growth potential.

Market Dynamics:

The eVTOL market is still nascent, facing regulatory hurdles and technological challenges that may delay commercialization and mass market adoption. However, significant efforts by industry and regulatory bodies are being made to accelerate progress. The potential benefits of air taxis in terms of traffic decongestion, environmental impact and time savings drive investor interest and push forward development efforts.

Key Challenges & Opportunities:

Challenges:

• Regulatory and certification processes for a novel type of aircraft are complex and lengthy.
• Technological hurdles and challenges remain in battery development, infrastructure development, and scaling manufacturing.
• Intense competition from numerous established and well-funded eVTOL players.

Opportunities:

• Pioneering first-mover advantage in a potentially massive urban air mobility market.
• Growing investor and partnership confidence, attracting substantial capital and expertise.
• Rapid advancements in battery and infrastructure development could accelerate market penetration.

Recent Acquisitions:

• None. As a young, pre-revenue company, Archer has not undertaken any major acquisitions in the past three years.

AI-Based Fundamental Rating:

Based on current market data and available information, I would assign Archer an AI-based Fundamental Rating of 6 out of 10. This signifies the potential and promising future outlook of the company, but the lack of current revenue, market uncertainties, and intense competition necessitate a moderate rating. The rating acknowledges the significant market opportunities, strong partnerships, and innovative approach of Archer, while recognizing the inherent risks associated with early-stage companies in a nascent industry with substantial regulatory and technological hurdles ahead.

Sources & Disclaimers:

This analysis utilizes data and information publicly available from sources including company filings, press releases, investor presentations, news articles, industry research reports, and relevant academic studies.

This overview is for informational purposes only and should not be interpreted as financial advice or an endorsement of investment decisions. The analysis is based on information available as of October 2023, and circumstances and market dynamics are subject to continual change, requiring independent due diligence before making investment decisions.

Conclusion:

Archer Aviation represents a company at the forefront of a transformative industry with ambitious goals and significant potential. The company faces substantial challenges but also boasts promising opportunities. While its AI-based Fundamental Rating reflects the moderate risk associated with its early stage and industry uncertainties, its innovative approach, strong partnerships, and significant market opportunity warrant ongoing observation as it navigates the complex road towards commercialization.