Archer Aviation (ACHR) shares closed nearly 20% higher on Monday following speculation of a potential partnership with Tesla (TSLA).
The investor excitement appears to have been triggered by a social media video featuring ACHR’s electric vertical takeoff and landing (eVTOL) aircraft alongside TSLA products.
Separately, the automaker also posted a cryptic video today, hinting at an Oct. 7 announcement. Following today’s rally, Archer Aviation stock is up more than 150% versus its year-to-date low.
ACHR stock has outperformed on the back of technical and operational milestones since April 4.
These include successful test flights reaching altitudes of an impressive 10,000 feet and completing a 55-mile journey in 21 minutes.
Archer Aviation has made substantial progress toward commercialization, securing crucial FAA certifications, including Part 141 for pilot training and Part 135 for commercial operations.
The company already has legitimate partnership with United Airlines (UAL) and Stellantis (STLA) and has been picked as the official air taxi provider for the 2028 Los Angeles Olympics as well.
Caution is still warranted in owning Archer Aviation shares due to significant challenges, including regulatory approvals and infrastructure development requirements.
Meanwhile, the NYSE-listed firm is yet to start generating any revenue, indicating it still has a lot to prove in terms of commercial viability and operational execution.
ACHR shares also face fierce competition in the race to dominate urban air mobility. Its rival, Joby Aviation (JOBY), has already flown passengers as part of an FAA-approved test flight.
More importantly, neither Tesla nor Archer Aviation has officially confirmed a potential team-up, which makes today’s gains more speculative than fundamental.
Wall Street firms also recommend caution in initiating a new position in Archer Aviation stock at current levels.
According to Barchart, while the consensus rating on ACHR shares remains at “Moderate Buy,” the mean target of about $12.39 indicates potential downside of nearly 10% from here.
