Archer Aviation (NYSE: ACHR) is aiming to build a business around urban mobility. At the heart of this vision is its electric vertical takeoff and landing (eVTOL) aircraft — “Midnight” — which can carry four passengers over congested cities in significantly less time than traditional ground-based travel.
It’s an intriguing idea, but will it catch on? Will flying taxis transform pre-revenue, cash-burning, stock-diluting Archer into a multi-billion-dollar business? Will that, in turn, make today’s $6 Archer stock a path to millions for long-term investors?
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As of today, April 22, Archer Aviation trades at about $6 a share and carries a roughly $4.5 billion market capitalization. Archer hasn’t traded above $8 a share since late January, even though it’s made some progress on its certification timeline.
Assuming no stock splits or dilutions (unlikely, but for the sake of example), a $10,000 investment in Archer at today’s price would need a 100x gain to reach $1 million. That, in turn, would require Archer’s market capitalization to grow to about $450 billion — about 75 times its current $6 billion backlog.
A larger upfront investment lowers the required return multiple. For example, turning a $25,000 investment into $1 million would require a 40x gain (implying a $180 billion market cap), whereas a $50,000 investment would need a 20x gain ($90 billion market cap).
These are just back-of-the-envelope calculations. In reality, the company’s valuation would likely need to be higher to turn your initial investment into $1 million, especially if Archer continues issuing new shares to raise capital. It’s not unusual for start-ups like Archer to issue new shares, but it does complicate the math: As the share count rises, each share represents a smaller slice of the company, therefore requiring more overall growth to reach $1 million.
For Archer to make you a millionaire, it has to prove multiple things at once.
Obviously, it has to clear the regulatory gate and start putting paying passengers in the air. That’s a first step, but it probably won’t push Archer’s market cap into the territory needed to turn a sizable investment into a million.
