Key Points
Archer recently announced a deal to acquire multiple subsidiaries from Boeing.
Last month, it unveiled new autonomous aircraft, which can expand its growth opportunities.
Its losses, however, have been growing.
Archer Aviation (NYSE: ACHR) stock has been red-hot of late. For much of the year, it's been doing poorly, but there have been some recent developments, including a deal to acquire multiple businesses from aircraft giant Boeing, which appear to have sparked renewed interest in this electric vertical takeoff and landing (eVTOL) company.
In just the past month, the stock has soared an incredible 45%. The big question is: has it risen too much too quickly, or can there still be more room for Archer's stock to rise even higher?
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Archer has been expanding its operations
On Aug. 10, Archer announced it reached an agreement to purchase three of Boeing's subsidiaries: Wisk Aero, SkyGrid, and Insitu. Archer CEO Adam Goldstein calls this "a watershed moment for Archer and the future of physical AI in aerospace and defense."
Wisk makes eVTOL aircraft for civilian and military use; SkyGrid develops ground-based air traffic control software; and Insitu manufactures uncrewed aircraft systems and AI-powered software for defense applications.
These businesses can help further expand and diversify Archer's operations, setting it up for future growth opportunities. Last month, the company also unveiled new autonomous aircraft -- Thunder for defense applications, and Halo for commercial purposes. It worked with Anduril, a defense technology company, to develop and design them.
For growth investors, this is a promising sign of the company's ambitions and long-term potential.
Is Archer's stock heading even higher?
Although Archer's stock has been rallying, it's still down more than 50% from its 52-week high of $14.62. At around $5.1 billion in market cap, its valuation is significant given that its Midnight aircraft still hasn't obtained regulatory approval, and that may not happen anytime soon. There's ample risk here for investors, as the company continues to incur significant losses. In its most recent quarter, which ended on June 30, the company's net loss totaled $263 million, up from $206 million a year ago.
Archer is expanding its business and has some promising opportunities ahead. It is, however, a risky stock, and there is plenty of uncertainty ahead. But for growth investors willing to be patient, there could be much more room for the stock to rise higher. In the short term, there may still be considerable volatility, which is why investors buying eVTOL stock will need a high tolerance for risk.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.