Archer Aviation Stock Skids: Mistaking Progress for Bad News?

Key Points

• ACHR stock is down over 7% in midday trading, continuing a sell-off that began on February 18; the stock is down over 9% in the last five days.
• The move solidifies the company’s balance sheet, but is hitting at the wrong time as investors are looking for reasons to sell.
• Analysts remain bullish, but the company’s earnings report on February 27 could bring more volatility.

Archer Aviation Inc. NYSE: ACHR stock is down over 7% in midday trading as the market sell-off enters its third day. One catalyst for the move appears to be Archer’s recent announcement that it had secured $301.8 million in additional funding as the company advances its electric vertical take-off and landing (eVTOL) platform, Midnight.

The company has begun building its initial fleet of Midnight air taxis to be used in testing with the Federal Aviation Administration (FAA). Archer announced the capital raise on February 13. At the time, MarketBeat’s Thomas Hughes noted that “the cash injection came at a cost of 35.5 million shares.” This kind of dilution is not uncommon with a pre-revenue company like Archer, but it does limit the upside for market bulls.

However, the slide in ACHR stock accelerated on February 18 on another sell-the-news event. That was the Trump administration’s DOGE committee’s request for cost-cutting at the Department of Defense (DOD). Archer has a $148 million deal in place with the U.S. Air Force “to assess the transformational potential of VTOL technologies for DOD purposes.”

Any selling action on that front, however, would seem shortsighted. Archer and its eVTOL platform seem to be the kind of advanced aircraft platform the United States military is looking to deploy.

Right Move, Wrong Time

Investors who have been involved with Archer Aviation shouldn’t have been surprised by the capital raise. The company is still in the pre-revenue phase and needs capital to build out at scale. And the money the company raised brings the company’s balance sheet to approximately $1 billion.

As part of the company’s plans, it now has the capital outlay (CO) for a production facility in Covington, GA. At scale by 2030, Archer expects the plant to turn out 650 aircraft per year. However, 2030 may look like an eternity for some investors who note that the facility is not complete, and the company still faces regulatory approval. The latter remains likely, as the company is in the last stage of certification, but there are no guarantees.

That said, the move comes at a time when investors are looking for any reason to sell. Despite the sell-off, ACHR stock is up over 89% in the last 12 months easily outpacing other aerospace stocks. And with short interest down 10.6% in the last month, but still at 16.6%, it’s not surprising that the bears have the upper hand in the short term.

Sentiment Remains Bullish

The Archer Aviation analyst forecasts on MarketBeat remain bullish on ACHR stock. In fact, on February 21, Raymond James reiterated its Outperform rating and raised its price target from $11 to $12. That’s above the consensus estimate of $11.33, which is 36.35% higher than the stock’s price during midday trading on February 24.

Without a change in sentiment, which is unlikely, the latest news for Archer is a sell-the-news event that could reverse as quickly as it hit the stock.

Earnings Could Bring More Volatility for ACHR Stock

At around $8.28, ACHR stock has dropped below its 50-day moving average and is approaching a level of support near its most recent low on January 14. If the stock slices below that, the 100-day moving average around $7 could be in play. But a positive earnings report could arrest the slide.

Archer Aviation reports earnings on February 27. Estimates are for Archer to report earnings of negative 25 cents per share and revenue of 200 million. The net loss would be better than the negative 35 cents per share it reported in the same quarter in 2024. However, it shows that the company continues to be years away from profitability.