Brett Schafer, The Motley Fool

Mon, Jun 23, 2025, 3:45 AM6 min read

• Archer Aviation is aiming to debut its eVTOL product shortly -- after it gets FAA approval.

• While the company is raising a lot of money, it is also experiencing a large burn rate.

• Its questionable unit economics and premium valuation should keep investors away.

• 10 stocks we like better than Archer Aviation ›

Electric air taxis -- otherwise called electric vertical takeoff and landing (eVTOL) aircraft -- have entered the investor zeitgeist. Many companies are aiming to build this innovative transportation vehicle, and perhaps none more aggressively than Archer Aviation (NYSE: ACHR). The start-up has raised billions of dollars and is aiming to sell its vehicle for air taxi networks around the world.

Investors have hyped up this pre-revenue stock, driving up the price by 226% in the last 12 months alone. Will Archer Aviation stock help make you a millionaire? The story is more complicated than you think. Here's why Archer Aviation is a high-risk stock that investors should be heedful of buying today.

Archer Aviation is a manufacturer building an eVTOL called the Midnight. Powered by electric batteries, this aircraft will have a pilot and four passengers that can take off vertically like a helicopter, but with minimal noise disruptions. It will be able to travel through the air to point-to-point destinations, which will be operated by Archer Aviation and its partners such as United Airlines. It is also working with partners internationally to build air taxi networks, including Abu Dhabi Aviation.

The promise of eVTOL air taxis is enabling passengers to avoid traffic on busy routes, such as going from Manhattan to the airport. Archer is betting there will be insatiable demand for this product, and likely at a premium price. Many cities around the globe are ensnared in persistent traffic jams. The Midnight aircraft promises to relieve the pressure.

That is, if the aircraft is approved by the Federal Aviation Administration (FAA). The FAA is 15% through its final verifications on the Midnight, which has already gone through a successful test flight with one of its propellers not working. More testing is to be done, but Archer Aviation looks to be on the path to FAA certification at some point in the near future, albeit without an exact date.

In the meantime, the company is not generating any revenue and burning cash. Management has raised a lot of money in the capital markets, most recently an $850 million stock offering at a $10 share price. The company now has $2 billion of liquidity, which will give it a few years of runway at its current annual burn rate of $450 million in free cash flow.