Is Archer Aviation a Millionaire-Maker Stock?

Every investor dreams of finding a diamond in the rough: a cheap stock with multi-bagger potential. Trading for just $4+ at the time of this writing, Archer Aviation $Archer Aviation (ACHR.US)$ could fit the bill as it helps pioneer the electric vertical takeoff and landing (eVTOL) industry with its flying taxis.

Let's dig deeper into the pros and cons of the company to decide if its shares are a good buy.

What are eVTOLs?
Batteries continue to improve in power, weight, and reliability, allowing companies to explore new uses for the technology, such as eVTOLs. These battery-electric helicopters are designed to take off and land vertically and operate as taxis.

They could disrupt the traditional helicopter market because their simpler designs, lower carbon footprint, and smaller size would allow them to operate in tight spaces.

Terrestrial electric vehicles (EVs) surged from relative obscurity to mainstream acceptance in less than two decades. Their airborne counterparts have lagged, but things could eventually change.

Investors should take everything analysts say with a grain of salt. Still, if the eVTOL industry reaches even a fraction of Morgan Stanley's projections, early movers like Archer Aviation could mint their fair share of millionaires, just like Tesla and other green-energy disrupters did. But for now, the biggest challenge will be achieving commercial operations.

Archer Aviation is extremely early in its history
Like many companies that hit public markets through mergers with special purpose acquisition companies, Archer is early in its development. In the third quarter, the speculative start-up generated absolutely no revenue. Meanwhile, its operations burned through around $122 million, mainly in research and development.

But the company is on the verge of some pretty important breakthroughs. Its flagship eVTOL platform, Midnight (designed to carry a pilot and four passengers), is nearing completion of the third of four phases to earn Federal Aviation Administration (FAA) approval of its design and all its components.

In the coming weeks, management also expects to complete its $65 million factory in Georgia, built with help from global automaker Stellantis. This plant should be able to produce up to 650 Midnight aircraft per year and set the stage for full commercial operation when the FAA gives the green light.

Most remarkably, Archer says it has already secured around $6 billion in potential orders from companies around the globe -- including Soracle, a joint venture between Japan Airlines and diversified manufacturer Sumitomo. Soracle has the option to buy up to 100 Midnight aircraft (worth $500 million) to pioneer air-taxi routes in major Japanese cities.

Is Archer a millionaire-maker stock?
There is a lot to like about Archer. Despite having no current revenue, it enjoys a clear pathway to commercialization, especially through international sales, which could allow it to earn money while it works on gaining FAA approval in the U.S.

It also has many established partners that offer financial support, expertise, and a potential ready market for its eVTOLs when they become available. Stellantis is helping with manufacturing and liquidity (committing up to $400 million in August), and United Airlines is working with the company to develop potential commercial air taxi routes.

But while Archer Aviation looks like a solid long-term buy with millionaire-maker potential, approval processes can be lengthy, which casts a shadow of uncertainty over the company's otherwise stellar prospects.