Al Root

Aerospace startup Archer Aviation just raised more capital.

That's a good thing and this money is earmarked for a new idea -- defense.

Tuesday, the maker of electric vertical take off and landing, or eVTOL, aircraft announced a $300 million investment from partners, including BlackRock.

Archer ended the third quarter with more than $500 million in cash and cash equivalents on its balance sheet. It also had access to money from its partner, auto maker Stellantis. Archer says the new capital gives the company access to about $1 billion in total liquidity.

"I believe the opportunity for advanced vertical-lift aircraft across defense appears to be substantially larger than I originally expected," said Archer CEO Adam Goldstein in a news release. "As a result, we are raising additional capital to help us invest in critical capabilities like composites and batteries to help enable us to capture this opportunity and more."

eVTOLs are typically seen as quiet air taxis that can ferry passengers short distances for reasonable prices due to falling costs for aerospace technology and batteries.

But eVTOLs, like a lot of other commercial aerospace technology, could have applications in defense. In December, Archer partnered with defense technology startup Anduril to develop aircraft for military applications.

Anduril develops "cutting-edge technology at speed," applying software and artificial intelligence to defense hardware.

Along with the new capital, the company reiterated its guidance for fourth-quarter operating expenses of $120 million to $140 million. Those numbers are in line with Wall Street estimates, according to FactSet.

Investors are focused on expenses because Archer hasn't generated significant sales yet. It's working on aircraft certification. Early commercial deployment could happen in 2025, pending regulatory approvals.

Wall Street projects 2025 sales of roughly $37 million, ramping to almost $600 million by 2027. Analysts project the company will use about $330 million in cash used developing its business in 2025 and more than $600 million cumulatively between 2025 and 2027. Wall Street models positive free cash flow and profits in 2028.

Investors can expect Archer stock to rise on Tuesday. More capital is what many startups need.

Archer stock rose 13.1% on Monday, closing at $10.20 the day before the announcement. Shares of eVTOL peer Joby Aviation rose 0.8%, while the S&P 500 and Dow Jones Industrial Average added 0.7% and 0.4%, respectively.

Nine analysts cover Archer stock. Seven, or 78%, have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target on Archer stock is about $11.30.

Write to Al Root at allen.root@dowjones.com

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February 11, 2025 08:30 ET (13:30 GMT)

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