TLDR: Undervalued at 1 billion Dollars, Long Term High Risk/ Very High reward Investment, 2 Major Catalysts Soon, Large emerging market with only 2 current actual competitors(174 bill market by 2034 and 1.5 Trillion by 2040). IMO, current Fair value is $10+.
I've been diving into the world of eVTOLs lately, and I think Archer Aviation ($ACHR) is a massively undervalued stock in an overvalued market. With yesterdays FAA approval paving the way for this new industry and some major catalysts on the horizon, I think we are at the moment of being not too early and not too late.
A New Era in Air Transport
Yesterday, the FAA released groundbreaking regulations approving a new category of air transport: powered-lift aircraft. This is the first new category of aircraft in nearly 80 years. This historic rule will pave the way for EVTOLS to start operating, a market projected to be worth $1.5 trillion by 2040. This is a significant step towards revolutionizing urban transportation, logistics, and even emergency response services.
What Are eVTOLs?
eVTOLs, or electric Vertical Take-Off and Landing aircraft, are a new type of air vehicles that offer a quieter (operating at about 45 dB), more cost-effective in build and operation(Can be 1/10 the cost of a helicopter), and cheap to supply with energy(10-50 minutes of charge in the current state of batteries) alternative to traditional helicopters. They are also easier and quicker to build than helicopters leading to scalability.
The leading companies in this space are:
- Archer Aviation (ACHR) valued at 1.15 Billion at $3.22
- Joby Aviation (JOBY) \- valued at 4.45 Billion at $6.20
- Volocopter \- a private German company valued at 1.87 Billion
Archer Aviations Midnight
Archer's flagship eVTOL aircraft, the Midnight, is designed to revolutionize urban air mobility, especially in congested metropolitan areas. Here's why it stands out:
- Cost Efficiency: Operating the Midnight can cost around $500 per hour, dramatically less than the $10,000 per hour it costs to operate traditional helicopters like the Blackhawk in disaster relief scenarios. This drastic reduction in operational costs comes from its electric propulsion system, which involves fewer mechanical parts and significantly lower maintenance needs. It make it a very affordable faster means of transportation/logistics.
- Speed and Range: Reaches speeds of up to 150 mph with a range ideal for 20-50 mile trips, turning hour-long commutes into minutes.
- Quick Turnaround: Equipped with a battery system that can charge in minutes(10-40 depending on route) between flights, allowing for rapid back-to-back operations.
- Safety Features:
- Distributed Electric Propulsion (DEP): Uses 12 electric motors and 12 propellers, so if one fails, others compensate—no single point of failure.
- Redundancy: Features 6 independent battery packs for enhanced reliability.
- Quiet Operation: Operates at around 45 dBA during forward flight, significantly quieter than traditional helicopters, reducing urban noise pollution.
- Payload: Can carry over 1,000 lbs, suitable for both passenger transport and potential cargo operations.
- Ease of Production: Designed to be easy and quick to build for scalable manufacturing.
- Efficiency in Development: Archer completed its required 400 flight hours for testing significantly ahead of schedule(4 months).
- Military Interest: U.S. Air Force entered into contracts with Archer Aviation worth up to $142 million due to its advanced capabilities, aesthetic appeal, and potential applications in rapid response and logistics
- Significant Backlog of Orders: Archer has amassed a **backlog of orders worth nearly $6 billio