TLDR: Current fair value is $10imo, Archer is currently the leader and will likely be the first to market, Major upcoming catalysts: Factory opening by the end of next month, Initiation of manufacturing in Jan, Final FAA certification, and Trump Presidency.

Archer Aviation ($ACHR) recently delivered a strong Q3 earnings call, highlighting significant advancements in their journey to commercialize eVTOL technology. With robust financials, strategic partnerships, New Trump Administration, and progress in FAA certification, Archer is positioning itself to outpace competitors and become the first to market in the eVTOL industry.

Archer Will Likely Be The First To Market

Archer Aviation ($ACHR) is likely to be the first to market in the eVTOL industry, even outpacing Joby Aviation. How? Their focus on scalability and an efficient supply chain sets them apart. They've strategically outsourced about 80% of their major components to established Tier 1 suppliers who have FAA certification expertise. This traditional aerospace model reduces development risks, speeds up the certification process, and taps into existing supply chains for faster scalability. Basically, they're not trying to reinvent the wheel, and it's paying off big time. This approach reduces development risks, speeds up the certification process, and utilizes existing supply chains for faster scalability.

In contrast, Joby follows a vertically integrated model, designing and manufacturing most components in-house, which allows for greater control and potentially higher performance but involves higher capital costs, longer certification timelines, and scaling challenges due to the novelty of its components. This difference in strategy positions Archer for a quicker and more efficient path to market.

As Archer tweeted on Friday, Archer's type-design is now matured, and they're ready to start producing piloted aircraft as soon as their factory opens at the end of this year. These aircraft will be operational by the beginning of 2025, with plans for piloted demonstrations and market survey flights with passengers throughout the year.

Trumps Interest in VTOLs and The New Secretary of Transportation

President Donald Trump recently announced his administration’s support for VTOL technology, recognizing its transformative potential for economic growth and national security. Adding to this momentum, among Trump's picks for Secretary of Transportation is Emil Michael. If appointed, he has close ties to Archer’s Chief Commercial Officer, Nihil Goel as he tweeted on Saturday. This relationship could facilitate smoother regulatory pathways for Archer as the Federal Aviation Administration (FAA) finalizes critical rules for advanced air mobility. With the new Trump administration, Archer is poised to benefit from from significant political and regulatory tailwinds that could accelerate its growth in a market projected to reach $1 trillion by 2040.

Financially Strong As Mentioned in Q3 Call

As mentioned in their Q3 call, Archer ended the quarter with over $500 million in cash reserves(with an additional 400M unaccounted for). With a quarterly cash burn of about $80-90 million, this gives them a solid 18-month runway. This strong cash position is further strengthened by their partnership with Stellantis, which has agreed to contribute up to $400 million to help scale the manufacturing of Archer's Midnight aircraft. This capital will cover manufacturing labor costs and capital expenditures for initial production at their new facility in Georgia. By outsourcing 80% of their components to established suppliers, they've managed to keep operational costs in check while accelerating production timelines.

Additionally, Archer has issued $30 million in performance warrants to Stellantis, which will vest upon achieving certain milestones. They also have contracts with the U.S. Department of Defense worth up to $148 million.

AHCR Fair valuation $10

After their Q3 earnings call, Archer received many analyst upgrades ranging between $10-12 PT. While Archer is ahead of JOBY in my opinion and will enter the market first, currently there's such a significant difference in market caps between Archer and Joby.

Joby is trading at $6.14 with a market cap of $4.72 billion, while Archer Aviation (ACHR) is at $5.00 with a market cap of only $2.15 billion. If we compare apples to apples, Archer should be valued potentially around $12. In fact, Archer is ahead imo due to its scalability, reliance on established parts suppliers, and lower costs. Their strategy will speeds up the FAA certification process and allows for quicker scalability. On the other hand, Joby's vertically integrated model, while offering more control, comes with higher capital costs, longer certification timelines, and scaling challenges. This difference in approach positions Archer for a faster and more efficient path to market, making the current valuation gap seem unjustified.

https://preview.redd.it/qhr6xhyzm22e1.png?width=2458&format=png&auto=webp&s=ca85222b2e70f5db8472cabd2e114bb77d2f17f6

I'm not a financial advisor and this post isn't financial advice. This DD is an opinion post which might contain mistakes. That being said, don't invest in this stock based on this DD and do your own research.