Archer Aviation stock analysis: ACHR nears make-or-break point

Archer Aviation stock price has surged and is nearing an important make-or-break point as focus shifts to its commercialization. ACHR has formed an inverse head and shoulders pattern, pointing to more gains after its loss narrowed in the first quarter. It was trading at $11.15, a few points below the key point at $12.45.

Archer Aviation narrowed its loss

The Electric Vertical Takeoff and Landing (eVTOL) industry is expected to boom in the next few years as the Federal Aviation Administration (FAA) approves aircraft by companies like Archer Aviation and Joby Aviation. 

The industry will also boom because of the expected market size as demand keeps rising in most cities. If this happens, it means that companies with a first-mover advantage will be the biggest beneficiaries. This includes firms like Joby Aviation, Volocopter, eHang, and Vertical Aerospace.

Archer Aviation will have three revenue sources. Its primary revenue source will be the aerial ridesharing service, aircraft sales, and technology licensing and partnerships. Its customers will be in the civil and defense industry.

The company has already secured key partnerships in the past few years. In the manufacturing space, it partnered with Stellantis, the parent company of Jeep and Chrysler. Stellantis will provide it with manufacturing funds, which it will recover by receiving quarterly stock awards.

Archer Aviation has also secured launch customers like United Airlines, Japan Airlines, Southwest, Ethiopian Airlines, and Abu Dhabi Aviation. United will receive up to 200 aircrafts for about $1 billion, while Japan Airlines will pay $500 million.

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For example, its partnership with United Airlines will see them operate an air taxi network connecting Manhattan with neighboring airports. The goal is to replace a one-to-two-hour drive with a 5-15 minute flight. 

The financial results released this week showed that Archer Aviation had a net loss of $93.4 million, down from $198.1 million in the last quarter and $116 million in the same period last year. The management hopes to continue cutting its expenses towards the start of its commercialization program. 

Archer Aviation also has adequate funds, meaning that it won’t need to dilute its shareholders this year. It has over $1 billion of cash in its balance sheet, some of which it raised in the first quarter.

Most analysts have a bullish outlook for the ACHR stock, with the most optimistic ones being from Needham, Canaccord Genuity, and HC Wainwright.

Archer Aviation stock price analysis

The daily chart shows that the ACHR stock price has rebounded after bottoming at $5.50 in April. It has rallied to the current $11.15, making it one of the best-performing companies in Wall Street.

Archer Aviation share price has remained above the 50-day and 100-day Exponential Moving Averages (EMA). Top oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards.

The stock has formed an inverse head and shoulders pattern whose neckline is at $12.46. Therefore, a move above that level will point to more gains, with the next point to watch being at $15, followed by $20. 

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