It has been a painful rough and tumble time for those eVTOL companies listed on the world’s stock markets. Share prices are down, investors are down, where belief and faith in this nascent industry is being sorely tested.

Yet, the last few weeks something has changed to offer hope to shareholders’ breaking hearts, particularly for those who hold an investment in Archer Aviation. Finally, some eVTOL companies are being taken seriously by the financial markets and viewed as a promising long-term hold.

The respected financial institution, J.P. Morgan, released an investors’ note on April 28th, stating the company was initiating coverage on the Archer stock with an overweight recommendation and a 2022 year-end process target of USD7.

Market relief was palpable. The share price shot up like a coiled spring, rising 20 percent on that day, more out of exuberance than on the back of any sage advice. Unfortunately, it duly dropped again some days later.

For last September Archer came to market via a SPAC with Atlas Crest Investment Corp after first reducing the initial pro-forma enterprise value of USD2.7 billion to USD1.7 billion. Listing on the New York Stock Exchange under the ticker symbol ACHR, the price opened at USD10. Following a brief flirtation at USD10.72, the price has been spiralling downwards ever since, hitting a 52 week low of USD2.61 in February. Presently, it has lost over 60 percent of its initial share value.

Yet, it is not all doom and gloom.

Deutsche Bank, another institutional heavy-hitter, agrees with J.P. Morgan. Research Analyst, Edison Yu, after comparing Archer with its two main rivals, Joby (JOBY) and Vertical Aerospace (EVTL), concluded last month that ACHR is “best positioned to dominate the emerging industry”, awarding Archer a “buy” rating and a USD10 price target, while giving Joby and Vertical only a “hold.”

Yu told, ”Archer’s shares are trading at a level that doesn’t give them credit for what they’ve done and what I think they will do.” Adding, “Once investors realise that, the stock price will rise.”

His enthusiasm for this future industry was highlighted when he remarked, “Urban Air Mobility has the potential to essentially replace traditional helicopters.” Therefore, it seems that a consensus is forming on Wall Street that air taxis are “the real thing” and Archer is an important stock to own.

Edison Yu

The pragmatist might remain on the fence for now pointing to the three companies propensity for burning cash at a frenetic pace. Archer alone spent more than USD110 million last year, but as successful entrepreneurs may point out, this is all part of building a major new business model and thanks to the market floatation, Archer has a big cash hoard to cushion these losses (USD724 million, net of debt).

Meanwhile, it would be poor form not to mention another supporter of Archer’s shares, none other than the infamous Cathie Wood, portfolio manager of ARKQ and ARKX.

She has been purchasing Archer equity for both funds since the company floated. Up until recently, 37 separate tranches. Wood had already bought 5.737 million shares by the end of last year, but in the first quarter of 2022 added an additional 5.568 million or a 98 percent increase to her holding. Wood’s stake in March lay at 11,306,020 shares, worth, even with such a present lowly share price, at well over USD30 million.

And it is not just Archer shareholders who should be rejoicing. Joby is also gaining the plaudits. Another Wall Street heavyweight, Morgan Stanley, has given the eVTOL company an “overweight” rating, meaning its stock is expected to perform better in the future and beyond others in the market sector, setting an ebullient share target price of USD16. 

Cathie Wood

This enthusiasm has been supported by financial website, seekingalpha, a former eVTOL sceptic, who recently told its readers to BUY Joby shares for a long-term hold. And not to be outdone, Vertical Aerospace was awarded a HOLD by Deutsche Bank last month with a short-term price target of USD9.

So, peer into a crystal ball or time-travel in your mind palace to 2024 and ask yourself this question. Do I equity stick or twist this year? As the great stock market investor, Warren Buffett, says, “Be fearful when others are greedy. Be greedy when others are fearful.”

For is the eVTOL receding share-tide soon to turn? The evidence tentatively suggests this.

(Do your own research and due diligence before purchasing any stock)

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