Prediction: Here's What a $10,000 Investment in Archer Aviation Will Be Worth in 5 Years
Key Points
Shares of Archer Aviation have fallen 40% in the past year.
The company became the first eVTOL developer to complete the third of four FAA Type Certification phases.
As of today, Archer Aviation (NYSE: ACHR) is trading around $5.60 per share. This means a $10,000 investment would purchase roughly 1,785 shares. How much this position grows in the next five years relies almost exclusively on Archer's ability to execute, and right now, I'm cautiously bullish that the pieces are falling into place for the electric vertical takeoff and landing (eVTOL) company.
First, Archer became the first eVTOL developer to finish the third of four FAA Type Certification phases. The company is targeting a launch of U.S. operations later this year under the eVTOL Integration Pilot Program. Archer has $1.8 billion in liquidity, giving it a substantial runway to get up and running.
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Wall Street analysts believe Archer could reach nearly $11 in a year, which doubles a $10,000 investment in just 12 months. Furthermore, if Archer hits its stated milestones on schedule, a conservative 15% CAGR through 2031 would put shares near $19 five years from now. That means the original $10,000 investment is now about $35,000, or 3.5 times the initial amount.
Image source: Getty Images.
Archer is still deeply unprofitable, and this assumes the company can execute with minimal delays or missteps. Any hiccups could significantly dampen that rosy prediction. However, closing in on the certification milestones will certainly reduce the risk associated with Archer. The eVTOL sector is also expected to grow substantially over this time frame, benefiting Archer investors.
If all goes well, I think the $35,000 target in five years isn't out of the question.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.