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Specialist in air mobility Archer Aviation (NYSE:ACHR) – which specializes in developing electric vertical takeoff and landing (eVTOL) aircraft – saw its shares fall on Monday amid a quiet day on Wall Street. However, fundamentals appear positive as Archer negotiated a major deal with the automotive giant. Stellantis (NYSE:STLA). With exciting projects in the pipeline, investors are keeping a close eye on ACHR stock.
First and foremost, Archer is set to receive new funding from Stellantis, including up to $370 million to cover labor costs associated with the planned production, according to a report by Design & Development todayArcher plans to produce 650 eVTOL units annually. On the other side of the deal, Stellantis will receive STLA shares “on a rolling quarterly basis based on the total labor costs incurred in a given quarter.”
In addition, Stellantis will put approximately $20 million on the table to cover the additional production investments associated with the production of Midnight, Archer’s first eVTOL aircraft.
However, one of the reasons ACHR stock has not developed much positive momentum could be valuation concerns. Currently, shares trade at a very high forward revenue multiple compared to the underlying aerospace and defense industry. Equity-dilutive transactions do not help matters. InvestorPlace’s Samuel O’Brient noted that the company reported better-than-expected results in the second quarter.
In addition, the company is working on several exciting projects. Here are three things you should know about ACHR stock.
Los Angeles’ air taxi network could be a game changer
Archer recently announced plans for an air taxi network in Los Angeles. Design & Development todayThe planned network “includes vertiports at key locations such as Los Angeles International Airport (LAX), Orange County, Santa Monica, Hollywood Burbank, Long Beach and Van Nuys.”
As O’Brient mentioned, despite the declining population, Los Angeles residents complain of increasing traffic problems. One of the complaints is limited public transportation availability. Air mobility could potentially help ease the burden, making ACHR stock interesting from a long-term perspective.
ACHR stock could see an NFL-sized rebound
As part of the network planning, Archer is working with the NFL’s Los Angeles Rams. The collaboration includes potential exclusive vertiports in Woodland Hills and Hollywood Park, the 300-acre district surrounding SoFi Stadium where the Rams play.
Archer is also in talks with the University of Southern California about joining the network.
Archer goes on the defensive
In early August, the Department of Defense determined that Archer’s Midnight eVTOL was flightworthy according to military standards. The air mobility specialist then delivered Midnight to the Air Force.
The military branch sent personnel to work with Archer’s flight test team at the company’s facility in Salinas, California. During testing, the Air Force conducted “simulated medical evacuation, cargo, intelligence, surveillance and reconnaissance flights” using the eVTOL aircraft.
At the time of publication, Josh Enomoto had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.
At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.
