Why Archer Aviation Stock Skyrocketed 204% in November

Archer Aviation's (NYSE: ACHR) electric vertical takeoff and landing (eVTOL) vehicles are still grounded, but the stock was taking flight last month as enthusiasm for the new short-distance transportation technology mounted. According to data from S&P Global Market Intelligence, the stock finished last month up 204%.

A surge in the second half of the month came after Needham initiated coverage on the stock with a buy rating after the Federal Aviation Administration (FAA) issued a new set of rules in October, clearing the way for the new vehicles to take flight.

As you can see from the chart below, the stock went parabolic shortly after the Needham note came out, soaring nearly every session after Nov. 18.

ACHR data by YCharts.

Archer gains altitude

Archer Aviation is still a development-stage company without revenue, but it's hopeful its vehicles will begin flying commercially as soon as late 2025.

Archer's eVTOL vehicles resemble advanced helicopters but have advantages, including being electric, being less noisy than helicopters, and having multiple engines, which means they don't have a single point of failure, unlike conventional helicopters.

Interest in the stock has been building as it moves closer to commercialization, but shares soared on high volume following the Needham note, which seemed to spark the rally. The stock jumped 16.3% on the bullish endorsement.

Needham gave the stock a buy rating and a price target of $11, noting that industry momentum had reached a tipping point. Analyst Chris Pierce also said its $6 billion order book thanks to customers like United Airlines gave it confidence in the stock, and it saw a path to $3 billion in annual revenue.

Archer stock gained in nearly every session in November since the Needham note came out as investors jumped on the bandwagon.

Image source: Getty Images.

What's next for Archer Aviation

eVTOL stocks have soared since the FAA released new special regulations to integrate eVTOL aircraft safely into the aviation system, essentially giving them government clearance.

However, the recent rally in the stock may have reached its ceiling as Archer shares plunged on Dec. 1 even though there was no news on the stock. Instead, investors took the opportunity to pocket profits, and the selling could also signal fears of a bubble in the stock as it's unclear how close it is to commercialization or what the underlying demand for eVTOL transportation is.

Investors should expect continued volatility in the stock as shares are likely to move in response to updates on its progress toward commercialization.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.