Is it advantageous to invest in Archer Aviation's stock at the present moment?

Is it advisable to invest in Archer Aviation's shares at present?

Archer Aviation, a California-based company specialising in electric vertical take-off and landing (eVTOL) aircraft, also known as "flying taxis," has made significant strides in its development and partnerships.

The company's flagship aircraft, the Midnight, is a five-seat, 12-rotored short-haul craft that has already completed its longest piloted flight of 55 miles in about 31 minutes at speeds above 126 mph.

Archer Aviation boasts heavyweight partners including United Airlines, Stellantis, and Boeing, and has secured a substantial cash position of $1.73 billion as of the end of June. The company raised $850 million in capital through selling stock in June, contributing to a four-quarter increase in its cash position.

However, the company is currently in the pre-revenue stage, awaiting Federal Aviation Administration (FAA) approval for the Midnight to begin commercial flights. While its cash position is impressive, the company's current cash burn rate is approximately $400 million over the trailing 12 months, indicating that it could operate for four to five years before needing to raise more funds.

Archer Aviation is continuing to burn cash on trials to demonstrate the safety of its aircraft for commercial use. Defense contracts could become a source of revenue, as aircraft made for defense contracts don't have to pass through the usual FAA certification pipeline. The White House has prioritized eVTOL technology as a part of its national defense strategy, which could lead to defense contracts for Archer Aviation.

Despite its strong financial position, Archer Aviation's stock is trading 32% below its recent high. The company's market cap is approximately $6 billion, but it has a lower cash position than Joby Aviation, which has a $12.7 billion valuation. However, even considering Toyota's expected $250 million contribution to Joby Aviation's war chest, Archer Aviation's current cash position is about $400 million more.

Archer Aviation's second-quarter net loss climbed to $206 million from $107 million in the prior-year period, reflecting the company's ongoing investment in research and development (R&D). R&D expenses have remained relatively steady for Archer Aviation.

In conclusion, Archer Aviation is a promising player in the eVTOL market, with impressive partnerships, a flagship aircraft that has demonstrated its capabilities, and a substantial cash position. Despite the challenges of the pre-revenue stage and a recent stock dip, the company's future prospects remain promising, particularly with the potential for defense contracts and the White House's focus on eVTOL technology.