Is Archer Aviation a millionaire company?

Some of the best investments initially seemed unknown or obscure, and often both. But they persevered and eventually took over a new market that grew and became mainstream. result? Life-changing returns from investors who invested early and never lost faith.

archer airlines (ACHR -2.99%) This is an interesting company that could follow a similar path towards a disruptive and successful business. They are racing to develop and bring electric air travel to market. That’s right. This makes the stock riskier than your average blue chip stock. But there is no reward without risk. What are the chances that Archer Aviation will make a profit on its investment?

Here’s what you need to know about stocks’ millionaire-making potential.

Archer Aviation and the Big Picture

You are probably already familiar with electric drones. This small electric device uses an electric motor to generate upward thrust. Today you can go to almost any hobby store and buy one. The basic concept of electric air transport is similar, but on a much larger scale.

Archer Aviation aims to launch a small aircraft that can carry up to four passengers on short trips. The aircraft is targeting a range of 100 miles on a single charge. This is for densely populated areas where traffic makes short trips over land difficult. Archer Aviation is currently targeting a commercial launch in 2025, and hopes to enter the commercial market before competitors such as: Joby Airlines.

According to Morgan Stanley, the electric vertical takeoff and landing (eVTOL) industry could quickly gain steam once launched. According to their research, the market is estimated to potentially reach $1.5 trillion by 2040. Archer Aviation’s current market cap is just $1.5 billion. In theory, a successful market launch and even a remote success in the broader industry could generate a diversified return on investment based on Archer Aviation’s current valuation.

Does Archer Aviation have the cash to make it?

Because Archer Aviation has not yet commercialized its products, the company is spending $316 million in cash burn over the trailing 12 months. It will conduct research, test and build a factory to build the aircraft, which executives expect to be completed this year.

The good news is that all the cash goes back to the business because the business doesn’t take on any debt.

ACHR Cash and Short-Term Investments (Quarterly) Data by YCharts

Archer Aviation, on the other hand, is constantly issuing new shares to raise the necessary funds. Last year, the number of issued shares increased by about 70 million shares. Adding new shares reduces the value of existing shares because they represent a smaller portion of the business. No one knows how long it will take for Archer Aviation to start making a profit, so investors buying the stock should probably expect the new share price to be diluted in the near future.

Buy Ideas

Typically, investors look at a stock and decide whether to buy or not based on the company’s growth and profits. But Archer Aviation today represents an idea that is more than a business. The company is still in its infancy and unpredictable. There is virtually no revenue or profit to judge this from.

So where does that leave investors? Learn as much as you can about Archer Aviation’s technology and products. If you believe electric air travel will succeed as a viable way for people to get around town, a $1.5 billion company like Archer Aviation is a risky stock, but one with enough potential upside to justify taking that risk.

When making purchases, consider dollar-cost averaging. The lower a company’s level of proof, the more volatile its stock can be. This means that investors can experience huge stock price fluctuations over several years.

Buy slowly so you can seize the opportunity.