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Los Angeles is widely considered to be one of the most traffic-congested cities in America. Hollywood has made a running joke of it for decades (La La Land, anyone?), and goodness knows -- certainly the Angelenos know it -- how many hours have been blown in stop-and-go traffic, whether rush hour or not.
If we can all agree that the traffic in L.A. is bad, then we can pretty much imagine the gridlock awaiting the city's freeways when the Summer Olympics arrive in July 2028.
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If, indeed, traffic is not bad, then Archer Aviation (NYSE:ACHR) may be one reason for it. And if my prediction comes true -- and Archer carries paying passengers above L.A. before the Olympic flame is lit -- investors who put $5,000 into this industrial stock today could have plenty of reasons to celebrate.
Archer Aviation is one of the frontrunners in the nascent eVTOL market. "eVTOL" stands for electric vertical takeoff and landing, and Archer's aircraft do exactly that: They lift up vertically like helicopters, then transition into forward flight in the manner of an airplane. That sentence can hardly convey the engineering complexity involved in making such a transition, much less doing it safely with four paying passengers and a pilot on board.
Archer hasn't, to be sure, demonstrated that its eVTOL (Midnight) can transition from vertical to forward flight with a pilot in the front seat, though it does expect to do so before the end of the year. It goes without saying, then, that Archer also doesn't have the regulatory green light to fly paying passengers, one reason why it reported a net loss of about $275 million in the third quarter.
There are, however, reasons to believe Archer will have solved these challenges before the 2028 Olympics, when the company is expected to serve as the official air taxi provider.
First off, Archer is already in the fourth and final stage of the FAA's type certification process, arguably the most important regulatory milestone yet. If it can acquire this certification, Archer will be authorized to operate Midnight commercially, provided it also obtains subsequent operational approvals. The fourth stage is admittedly pretty extensive -- it involves a lot of testing -- but with nearly two years before the Olympics, Archer has time to secure these approvals before the torch is lit.
Archer may, in fact, be able to carry passengers before it finishes the fourth stage, thanks to the federal government's eVTOL Integration Pilot Program (eIPP). The program, which also includes Archer's rivals Joby Aviation and Beta Technologies as participants, allows Archer to work directly with the FAA to introduce limited passenger operations before it completes the standard certification process. Indeed, Archer recently received a special airworthiness certificate allowing it to pilot demonstration flights in Los Angeles, which the company expects to start in 2026.
Finally, Archer has already begun building infrastructure in Los Angeles in preparation for its role as the official air taxi provider. This has included securing control of Hawthorne Municipal Airport and planning takeoff and landing sites across the city.
So, what will Archer stock, currently trading at sub-$5 a share, be worth by the 2028 Summer Olympics?
My prediction: I think Archer will at least double to $10 a share if it has commercial flights underway by the Olympics. That would put its market cap (currently about $4 billion) near $9 billion, accounting for the roughly 155 million additional shares expected to be issued in its pending acquisition of Boeing's aviation subsidiaries. For perspective, Joby Aviation is currently valued at $6 billion, and it also doesn't have a certified commercial eVTOL in service.
Thus, if someone were to invest $5,000 today, doubling would put that investment at about $10,000 by July 2028.
Of course, this is an estimate based on today's situation, which can change. Archer still faces a mountain of challenges, not the least of which is manufacturing eVTOLs and navigating cash burn. Still, if Archer can turn its ambitious plans into an operating air taxi service, investors who get on board today could be rewarded handsomely.
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Steven Porrello has positions in Archer Aviation and Joby Aviation. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.
Prediction: Archer Aviation Will Fly Paying Passengers Before the 2028 Olympics. Here's What $5,000 Invested Today Could Be Worth by Then. was originally published by The Motley Fool
