Not counting early investor and major shareholder Brett Adcock, the insiders are buying Archer Aviation (NASDAQ: ACHR). The CEO and CFO of the company, along with 2 board members, all made major purchases in this budding EV company. Archer Aviation is in the business of eVTOL, or electric vertical take-off and landing, which is seen as the future of personal transportation.
Imagine a drone, one of those flying objects with 4 propellers that looks like a flying saucer but is not. The kid's toy but larger, big enough for a pilot and 4 passengers, and you get the idea. The technology is not new; Archer Aviation and competitors like Joby Aviation (NASDAQ: JOBY) have worked on this for years and are on track to launch the first air taxi services in 2024.
What does this mean for Archer Aviation? The insiders think the stock is undervalued because that is the only reason for them to buy it unless there is some trouble, and that doesn’t appear to be the case.
The one insider selling is the company’s 4th largest shareholder and may want to liquidate shares. On the institutional end of the spectrum, buying is the name of the game.
The institutional slowed down in Q4 2022 and so far in 2023 but was active in the earlier portion of the year. The net of activity has institutional holdings up to over 41%, which is quite a vote of confidence. Joby has a smaller 30% institutional ownership but a 51% insider ownership compounds this. Either way, both of these stocks are tightly held.
Archer Aviation Lines Up Major Deals
Archer Aviation recently got a new investment from long-time supporter Stellantis. Stellantis is a major player in the OEM vehicle market and brings a lot to the table.
The new deal includes financing and personnel and manufacturing support needed to get the flagship product to market. This is on top of a deal with Garmin to supply flight deck electronics to the company. This is a crucial element in the company’s progress and plays a key role in airworthiness and FAA approvals.
“We’ve been working closely with Archer for the past two years, and I am continually impressed by their ingenuity and unwavering commitment to deliver,” said Carlos Tavares, Stellantis CEO. “Deepening our partnership with Archer as a strategic investor with plans for growing our shareholding demonstrates how Stellantis is pushing the boundaries to provide sustainable freedom of mobility, from the road to the sky.”
Meanwhile, Joby Aviation, with the backing of Delta Airlines, among others, announced the successful completion of a mandatory FAA system review. The review is the 2nd in a 4-step process leading to FAA certification. The goal of the review is to ensure the development and production of the aircraft meet safety requirements that include system redundancy.
eVTOL Stocks Are A Buy, If You Don’t Own Them
eVTOL stocks are catching the eyes of analysts. Archer is rated a Moderate Buy compared to Joby’s Hold but both stocks have triple-digit upside potential.
Archer has received some positive commentary recently due to its good news but is in roughly the same position as Joby in regard to the timeline for the operational start-up. The next visible catalyst for both companies is the fiscal Q4 earnings reports which are due out in early-to-mid March.
Looking at the charts, using Joby as a proxy for both due to the lack of history for Archer, these stocks could be at a bottom. Assuming market interest continues to build as it has, price action should move sideways at worst.
The good news in the earnings reports or mid-cycle updates like certification testing may also support the market. Hiccups in development may cause pullbacks, and the risk is the technology will be deemed non-viable, which doesn’t appear to be a real possibility.