Archer Aviation (ACHR) – A Deep Dive for Retail Investors

Archer Aviation’s stock has experienced significant volatility over the past year, with sharp rallies followed by steep pullbacks. After a strong mid-year surge that saw shares briefly spike above the $10-$12 range, the stock retraced and ended the year in the high-single digits. Trading activity has been brisk throughout. Daily share volume often swings into the tens of millions as traders react to news in the emerging air taxi sector. Options trading has been especially notable: at various points in 2025, unusual options activity emerged with call option volumes more than doubling their average levels. On one summer trading day, for example, over 130,000 call contracts traded (about a 60% jump vs. typical volume), and open interest in Archer’s options climbed to near-record highs. This elevated speculative activity, with traders positioning for big moves, underscores the market’s excitement (and uncertainty) around Archer’s prospects. In short, ACHR has become a volatile battleground stock, with quick swings fueled by hype around milestones and frequent bursts of speculative options buying. Retail investors should be prepared for this turbulence as the company navigates its next steps.

Institutional positioning in Archer Aviation reflects both conviction from visionary investors and the watchful adjustments of large funds. Notably, Cathie Wood’s ARK Invest has made Archer a high-conviction bet. By late 2025 ARK held roughly 30 million shares across its funds, an allocation that made Archer a top 15 position in ARK’s portfolio. ARK added significantly to its stake on share price weakness (purchasing over 3 million shares in one early-November buying spree), a sign of confidence in Archer’s long-term potential. Such bold accumulation by a well-known growth investor has been a vote of confidence and has not gone unnoticed by the market. Beyond ARK, a range of institutional investors have been steadily increasing positions. Various hedge funds and even conservative institutions like state pension funds upped their holdings over the past year, albeit in smaller increments.

All told, institutions (including ETF providers) now own a substantial portion of Archer’s float; roughly half of outstanding shares by some estimates, Indicating that smart money is firmly involved. In addition, Archer benefits from strategic investors: Stellantis N.V., the global automaker, owns over 8% of Archer’s stock as part of its partnership, and United Airlines – while primarily a customer, has also invested via a $10 million pre-delivery deposit for future aircraft. This blend of visionary fund ownership and corporate backing gives Archer a support base beyond just retail traders, potentially lending some stability in a highly speculative sector. However, it also means institutional expectations are high, and these stakeholders will be closely monitoring Archer’s execution on its promises.

Several key catalysts have been driving sentiment on Archer Aviation, and they will remain in sharp focus as we head into 2026. First and foremost is the progress toward FAA type certification for Archer’s Midnight aircraft. Archer has systematically checked off important regulatory milestones: it secured an FAA Part 135 Air Carrier Certificate in mid-2024 (becoming one of only two eVTOL companies with approval to operate commercial air services, which lays groundwork for future air taxi operations), and it has successfully moved into the final stages of testing for its aircraft’s type certification. In June 2024, Archer achieved a major engineering feat by completing the full transition flight of Midnight vertically taking off, then smoothly switching to wing-borne cruise at over 100 mph – a critical validation that the aircraft can perform as intended.

As of late 2025, Archer is working through the compliance testing phase with the FAA; the timeline for full certification is still uncertain (some analysts caution it may not come until 2026-2027 or later), but any concrete progress or interim approvals could be a major stock catalyst. Meanwhile, Archer’s strategic partnerships and contracts provide additional near-term triggers. The company’s alliance with Stellantis has led to the build-out of a dedicated manufacturing facility and a commitment of significant resources (Stellantis has agreed to contribute hundreds of millions of dollars worth of capital and manufacturing expertise to scale production). This partnership de-risks Archer’s path to mass production once certification is achieved. Archer is also collaborating with United Airlines to launch initial air taxi routes – United has a conditional order for 100 aircraft, and the two companies have been planning route networks (such as an early pilot route in Chicago) to integrate eVTOL flights into airline hubs. Another major catalyst has been Archer’s push into the Middle East: in 2025 the company entered into a landmark agreement with Abu Dhabi to make that city one of the first in the world with commercial eVTOL service.

Archer successfully conducted test flights of Midnight in the UAE desert environment, and Abu Dhabi’s aviation regulators have been actively working with Archer to fast-track approvals. The plan is to have Archer’s “launch edition” air taxi service commence in Abu Dhabi as early as 2026. A high-visibility project that could demonstrate the technology’s viability to the world. Finally, Archer’s relationship with the U.S. Department of Defense is a noteworthy catalyst: the company secured a contract worth up to $142 million with the U.S. Air Force, which includes delivering up to six Midnight aircraft and providing related services for military pilot training and base logistics. Archer delivered its first Midnight to the Air Force in 2024 and has begun receiving payments under this deal. This not only provides non-dilutive funding, but also serves as a strong validator of Archer’s technology (the military’s stamp of approval). Summed up, Archer’s news flow in the coming year will revolve around certification milestones, strategic partnership developments, and initial commercial deployments – each of which can significantly sway market sentiment.

A potential overhang on the stock is an ongoing lawsuit that underscores the high-stakes competition in the eVTOL industry. Archer has been embroiled in a legal saga over intellectual property, which has evolved over time. Back in 2021, rival Wisk Aero (backed by Boeing) sued Archer, alleging theft of trade secrets and patent infringement related to eVTOL designs. That litigation was fierce and lasted over two years, but it ultimately reached a global settlement in 2023. The settlement’s resolution was unique: Archer did not pay damages or admit wrongdoing; instead, it agreed to partner with Wisk for future autonomous flight technology (essentially designating Wisk as a supplier of autonomous systems for Archer’s later aircraft), and Boeing (Wisk’s stakeholder) even agreed to invest in Archer as part of the deal. This pragmatic alliance effectively turned a courtroom battle into a collaboration, allowing Archer to put the Wisk dispute behind it. However, just as that chapter closed, a new lawsuit opened – this time brought by Joby Aviation, Archer’s fiercest direct competitor in the U.S. air taxi race. In November 2025, Joby filed a complaint accusing Archer of “corporate espionage” and misuse of trade secrets.

The specific claim involves a former Joby employee who joined Archer’s ranks; Joby alleges that before departing, this individual improperly took confidential files (related to vertiport partnerships and infrastructure deals) and that Archer then benefitted from that information in its own negotiations. Archer has strongly denied these accusations, stating that it has no agreements with the partner in question and accusing Joby of attempting to stifle competition through litigation. This case is still in its early stages, a court hearing is scheduled for March 2026 and it introduces some legal risk for Archer. If Joby’s claims were to be validated, Archer could face injunctions or financial penalties, and at minimum the lawsuit could distract management and generate negative press. That said, many industry observers see this as a symptom of the intense rivalry in a nascent market: both Archer and Joby are racing toward commercialization, and each wants to guard its turf.

Investors should monitor this legal overhang, but also note that Archer has navigated a similar challenge before (the Wisk case) and emerged with a collaborative outcome. For now, the lawsuit injects an element of uncertainty – a reminder that technological moats and proprietary know-how are fiercely protected assets in the eVTOL arena.

On the financial front, Archer Aviation’s liquidity and cash burn are critical factors for investors assessing its runway. As of the latest reported quarter, Archer held a robust cash balance (on the order of $1.5 – $1.6 billion in cash and short-term investments heading into 2026), bolstered by a series of capital raises and strategic investments. The company has proactively raised funds to support its heavy R&D and certification costs – including a $215 million round in early 2023 and an additional ~$175 million equity raise later, alongside tapping partnerships for financial support. A cornerstone of Archer’s funding strategy has been its partnership with Stellantis, which not only bought equity in the company but also agreed to shoulder significant production costs: Stellantis will contribute up to roughly $370-$400 million worth of manufacturing resources (such as covering labor and equipment expenses at Archer’s production facility) as Archer ramps up to mass production. This is a major benefit to Archer’s finances, effectively reducing the cash the company itself must spend to build out assembly lines for Midnight.

Additionally, Stellantis provided Archer with a $150 million equity line that Archer can draw on if needed, giving extra flexibility. Despite these strong cash infusions, Archer is inherently a cash-burning venture at this stage. The company is not yet generating meaningful revenue (aside from small amounts tied to development contracts like the Air Force, and any payments from early pre-orders). In 2025, Archer’s net loss is estimated to be in the hundreds of millions (roughly $600+ million), and this cash burn rate may increase further in 2026 as the company scales testing, begins initial production, and prepares for service launch. Wall Street analysts project that Archer might finally start recognizing modest revenue in 2026 (possibly tens of millions if a few aircraft are delivered to customers like the Air Force or Abu Dhabi), but the business will still be far from breakeven. The upshot is that Archer’s current cash on hand is expected to fund its operations through at least the next year or two, but continued losses mean that additional capital raises will likely be needed down the line.

Management has already diluted the share count significantly since the SPAC merger (issuing equity to raise cash in multiple rounds), and investors should be mindful that future dilution is a possibility as the company prioritizes staying solvent through the lengthy certification timeline. On a positive note, Archer’s ability to attract blue-chip funding partners (automakers, airlines, the U.S. government, and high-profile tech funds) speaks to its credibility and helps alleviate financing concerns. Still, maintaining a healthy liquidity runway is essential – the company must execute key milestones before the cash runs too low or else it would have to tap markets again under less favorable conditions. In summary, Archer is reasonably well-capitalized for now, but it is spending aggressively to bring its aircraft to market, making financial discipline and fundraising strategy important areas to watch as we approach the commercialization phase.

Conclusion – Looking Ahead to 2026: Archer Aviation presents a classic high-risk, high-reward profile as it enters a pivotal year. On the bullish side, the company has meaningful tailwinds: a technology that has shown real progress (validated by successful test flights and a substantial order backlog of around $6 billion across customers like United, Air Force, and international partners), plus deep-pocketed allies in its corner. The fact that Archer is aiming to initiate the world’s first commercial electric air taxi service in Abu Dhabi in 2026 means it could leapfrog many skeptics if it delivers on that promise – tangible revenue service would be a landmark achievement for the industry. Additionally, broader sentiment toward advanced air mobility is improving, with regulators and governments actively supporting integration of eVTOLs (for instance, the FAA’s recently launched program to accelerate eVTOL certification and the UAE’s enthusiasm for air taxis). Wall Street’s current stance on ACHR is cautiously optimistic: the stock carries predominantly “Buy” ratings and analysts’ average price targets suggest upside into the low-teens, reflecting an expectation of successful milestones ahead.

However, on the bearish side, Archer must contend with significant headwinds and execution risks. Competition is fierce – rivals like Joby are on similar timelines and might secure certification or commercial deals first, and aerospace giants (Boeing, Airbus, etc.) are backing various contenders. Any stumble by Archer in testing or delays in FAA certification could set back its timeline, potentially ceding first-mover advantage. Moreover, the path to profitability will be long; even if Archer launches operations in 2026, it will likely operate at a loss for years while scaling up manufacturing and route networks. This raises the possibility of further dilution or debt if cash needs outstrip current reserves. Lastly, the recent legal tussles serve as a reminder that unforeseen challenges can emerge suddenly.

Taking all this into account, the near-term outlook for Archer’s stock will hinge on critical milestones: Will the FAA grant necessary certifications on schedule? Can Archer smoothly transition from prototypes to production units? Will early services in 2026 delight customers and regulators, proving the naysayers wrong? If the answers trend positive, market sentiment could turn decidedly bullish and reward the stock. If not, volatility will persist and skepticism will grow. Therefore, investors should maintain a balanced perspective. Archer Aviation enters 2026 with immense opportunities ahead, and indeed the potential to be a transformative multibagger over the long run. It also carries considerable execution risk. In sum, the story of Archer is one of bold innovation meeting the realities of bringing a new industry to life. The coming year will be crucial in determining whether Archer’s vision truly takes flight or encounters turbulence on the way to the skies.