SANTA CLARA, Calif. - Archer Aviation Inc. (NYSE: NYSE:ACHR) has announced a strategic partnership with Stellantis, securing approximately $400 million to scale up production of its Midnight electric vertical takeoff and landing (eVTOL) aircraft. The collaboration is expected to facilitate the manufacture of 650 eVTOLs annually at Archer's Georgia facility through 2030.
The agreement in principle outlines Stellantis' commitment to cover labor costs and certain capital expenditures. This follows a $55 million equity investment by Stellantis in Archer last month. Additionally, Archer has raised $230 million in equity capital since the end of the second quarter from investors, including Stellantis and United Airlines (NASDAQ:UAL).
Archer's recent achievements include the unveiling of a planned air taxi network in Los Angeles, with vertiports at strategic locations, and delivering the first Midnight aircraft to the U.S. Air Force under a contract potentially worth $142 million. The company also announced an agreement with Future Flight Global for the purchase of up to 116 Midnight aircraft, valued at up to $580 million, bringing Archer's indicative order book to nearly $6 billion.
The financial results for the second quarter ended June 30, 2024, show a net loss of $106.9 million with total operating expenses of $121.2 million. Archer's cash and cash equivalents stood at $360.4 million, not including the proceeds from the Stellantis investment received in July.
Archer's CEO, Adam Goldstein, expressed optimism about the company's progress and commercial prospects, noting the indicative order book and additional funding as key factors in their goal for commercialization as early as next year.
The company will host an earnings conference call today to discuss the results and estimates for the third quarter of 2024, with non-GAAP total operating expenses projected to be between $90 million and $100 million.
In other recent news, Archer Aviation Inc. has made significant strides in its operations. The company reported robust first quarter earnings in 2024, exceeding flight test goals for its Midnight aircraft and maintaining strong liquidity of approximately $523 million. Archer has also announced a joint venture with KakaoMobility, a leading taxi-hailing and ridesharing platform in Korea, aiming to integrate Archer's Midnight aircraft into Kakao T for air taxi flights starting in 2026. Canaccord Genuity (TSX:CF) maintained a Buy rating on Archer Aviation, highlighting the company's international expansion and business model.
Archer Aviation has also recently drawn the remaining $55 million from a Forward Purchase Agreement with Stellantis N.V. (NYSE:STLA), issuing over 17 million shares of its Class A common stock, a move anticipated to support the company's continued technology development and market expansion.
The company has announced its intention to establish an electric air mobility network in Los Angeles by 2026, featuring vertical take-off and landing locations at several key points across the region. This development is part of Archer's broader vision to revolutionize urban transportation.
Archer Aviation has also secured significant tax incentives from the California Alternative Energy and Advanced Transportation Financing Authority for eVTOL production. Lastly, the company has amended its corporate charter, adopting new bylaws, electing directors, and extending liability protection to certain company officers.
InvestingPro Insights
As Archer Aviation Inc. (NYSE: ACHR) takes a significant step forward with its strategic partnership with Stellantis and secures substantial funding to boost its eVTOL aircraft production, the company's financial health and market performance provide additional context for investors. With a market capitalization of $173.86 million, Archer's valuation reflects investor sentiment and market conditions. Despite the company's ambitious plans, the InvestingPro Tips indicate that Archer is quickly burning through cash and has weak gross profit margins, which are critical factors for potential investors to consider. Moreover, analysts have expressed concern, as they do not anticipate the company will be profitable this year.
InvestingPro Data shows that Archer's stock price has been quite volatile, with a 6-month price total return of -25.87% and a year-to-date price total return of -37.46%. These figures underscore the stock's recent performance challenges. Additionally, the company's Price/Earnings (P/E) ratio stands at -0.31 on a trailing twelve-month basis as of Q1 2024, which suggests that investors are factoring in the company's lack of profitability in their valuation.
However, it's not all challenging news for Archer. The company holds more cash than debt on its balance sheet, which is a positive sign of financial stability. Moreover, Archer's liquid assets exceed its short-term obligations, providing some cushion for its operations in the near term. For investors seeking more in-depth analysis, there are over 10 additional InvestingPro Tips available at https://www.investing.com/pro/ACHR, which can offer further insights into Archer Aviation's financial health and market prospects.
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