Shares of Archer Aviation are up nearly 3% after a bullish call from Deutsche Bank. The pre-revenue company has several contracts and the cash to get across the finish line. Options activity is strong and short interest is high; both could make the price of ACHR volatile in the short term. Archer Aviation Inc. NYSE: ACHR stock is up more than 2.7% after a bullish analyst rating. Edison Yu of Deutsche Bank reiterated his bullish rating on the flying car company and maintained his price target of $12 for ACHR stock, which would be a 140% increase from the stock’s 167% gain in 2023. Archer manufactures electric vertical takeoff and landing (eVTOL) vehicles and is among the leading names in the flying car sector. As part of his bullish call, Yu cited the company’s strong cash position, making it more likely the company won’t need to raise capital before production starts. However, there’s a difference between hope and hype. So here are some important things to know before you invest capital in ACHR stock.
Archer is still a pre-revenue company and not yet profitable. However, that will be changing for the better. The company has a $140 million contract with the U.S. Air Force for 600 of Archer’s Midnight production aircraft. The company also partners with United Air Holdings Inc. NYSE: UAL and is building out its strategy to launch “trunk” routes from an airport to a city center, with known demand and strong willingness for such a service. Archer’s stock has been a phenomenal outperformer in 2023, but whether you’re sitting on a profit or a loss depends on when you got in on the trade. ACRH stock is down 13.5% in the last three months, but if you were a shareholder at the beginning of the year, you’re up 166%. There is heavy options activity in the stock in the next two months, as open interest on the January 19, 2024, $5 call option is over 15,000, indicating many traders and institutional investors are building long positions in ACHR stock. On the other hand, the stock has a healthy degree of short interest, over 29.5%, supported by one short-seller report that suggests the company may not be ready for mass production until well beyond the company’s stated goal of 2028. However, any positive news on that front could make the stock a candidate for a short squeeze. The short-term price action in Archer is likely to have little connection to any fundamentals, so buy-and-hold investors have time to build their positions slowly, especially as price action will likely be choppy over the next few months.
