Archer Aviation Said It Has More Than $6 Billion in Orders. What Does That Actually Mean for Investors?
Archer Aviation(NYSE: ACHR) is angling to become the top player in the fledgling electric vertical take-off and landing ( eVTOL ) market. As a category of aircraft, eVTOLs could offer big advantages, including requiring smaller launching footprints needed for takeoff, lower noise profiles, less complex engines that require less maintenance, and improved safety.
While the broader eVTOL market has plenty of promise over the long term, that hasn't stopped Archer Aviation stock from struggling over the last year. The company's share price has fallen roughly 62% across the stretch and is now down 70% from its high, pushing the company's market capitalization down to roughly $3.2 billion.
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Even though Archer is currently generating very little revenue and its stock has been struggling, the company has made statements that could support a strong bull case. Notably, Archer has said that it already secured more than $6 billion in orders for its Midnight eVTOL aircraft. What does this impressive backlog number mean for investors?
Archer's $6 billion backlog and valuation implications in profile
In 2024, Archer said that it had more than $6 billion in orders already lined up for the Midnight eVTOL. The company also said this amounted to roughly 1,200 vehicles on order, meaning each aircraft would be sold for roughly $5 million.
The company has also disclosed that it has substantial contracts lined up with customers, including United Airlines, Japan Airlinesand Sumitomo's Soracle joint venture, ITA Airways, and Abu Dhabi Aviation. These are reputable, high-profile customers, and substantial orders from them would seem to represent strong votes of confidence in Archer's tech and the overall commercial viability of its aircraft.
With the company currently valued at roughly $3.2 billion, that means that Archer Aviation is trading at roughly 53% of its previously stated order backlog. Meanwhile, Archer is currently valued at roughly 210 times this year's expected sales.
ACHR PS Ratio (Forward) data by YCharts.
The company is still seemingly in the very early stages of ramping up its vehicle production, but it has said that it expects to be able to produce roughly 650 Midnight eVTOL aircraft annually by 2030 after scaling up operations to full capacity in the production plant it operates with Stellantis in Georgia.
Based on that timetable, Archer could conceivably fulfill its stated delivery orders by 2030 or 2031 and have generated the accompanying $6 billion in revenue from just the sale of those Midnight crafts. If the company were to achieve that and demonstrate progress toward gross margin targets, its stock would likely skyrocket far above current levels. But there are a couple of huge catches.
What does Archer's stated $6 billion backlog mean for investors? Not much.
Having more than $6 billion in orders for a new type of aircraft that's supposed to disrupt how people travel sounds pretty good on paper. Having big-name airlines as purchasers and a large automotive player like Stellantis as your key manufacturing partner is even better. On the other hand, there's no guarantee that Archer's stated $6 billion order backlog will translate into substantial revenue.
While Archer listed an order backlog of more than $6 billion as a headline number in earnings updates and presentations, it also disclosed in footnotes that this figure was contingent on conditional agreements and the satisfaction of terms in future definitive agreements. In other words, it's not clear that Archer has actually locked in any substantial definitive orders for its Midnight aircraft -- and there's very little of that stated $6 billion backlog that investors can bank on. It gets worse.
Archer Aviation has stated that it has more than $6 billion in orders booked, but it hasn't provided an update on that figure since it published its third-quarter results in November 2024. Even more concerning, the company hasn't mentioned the size of its order book in any subsequent official filings or investor updates.
Archer has not only provided zero updates showing growth in the size of its order book over the last two years; it has also stopped referencing the size of its order book completely. That's not a good sign, and it adds some concerning context to the bigger push into alternative defense industry opportunities that the company has been pursuing through partnerships and acquisitions recently.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy .
Archer Aviation Said It Has More Than $6 Billion in Orders. What Does That Actually Mean for Investors? was originally published by The Motley Fool
