Archer Aviation Skyrocketed Today -- Is the eVTOL Stock a Buy?

Archer Aviation (NYSE: ACHR) stock soared in Monday's trading. The company's share price ended the daily session up 13.1% amid the backdrop of a 0.7% gain for the S&P 500 (SNPINDEX: ^GSPC) and a 1% gain for the Nasdaq Composite (NASDAQINDEX: ^IXIC).

In addition to the bullish backdrop for the broader market, Archer Aviation stock appears to have gotten a lift from an article published by The National yesterday. The article outlines the electric vertical takeoff and landing (eVTOL) aircraft specialist's plans to launch commercial operations in Abu Dhabi this year, and includes some interesting information about the company's pricing plans.

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For example, Archer Aviation CEO Adam Goldstein said that a roughly 22-mile trip between two destinations in Abu Dhabi would cost approximately $95 on a currency-adjusted basis. Goldstein emphasized that his company's air taxis offered convenience advantages and would not just be tools for the rich.

The National's article also highlighted that Archer Aviation recently "signed a $140 million deal" with the U.S. Department of Defense (DoD) to evaluate eVTOL craft in various operational scenarios. It's not immediately clear if this refers to the same contract worth up to $142 million that Archer signed with the DoD in July 2023. Given the size of Archer Aviation's stock gains today, it's possible that some investors are interpreting it as a new contract win.

Is Archer Aviation stock a buy right now?

Archer Aviation is valued at roughly $4.4 billion, despite having yet to record any sales through its core business. With that kind of revenue and valuation profile, it's safe to say that the stock is highly speculative. It's also safe to say that shares will likely continue to be highly volatile in the near term. I think that investors who are inclined to wait for a cheaper buying opportunity in conjunction with a valuation pullback will probably have chances to do so.

On the other hand, I think Archer Aviation is still a compelling long-term investment for risk-tolerant investors at current prices. Between opportunities in the commercial flight and defense industries, I expect that the company will be able to deliver performance that justifies and exceeds its current valuation. Archer remains in the fledgling stages of capitalizing on what could be massive growth opportunities, and I think that purchasing shares at today's pricing levels would be a worthwhile move as part of a larger dollar-cost averaging strategy.

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Keith Noonan 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.