Why I'm Perfectly Fine With Archer Aviation and Joby Aviation's Twin Pullbacks

Archer Aviation and Joby Aviation have experienced recent stock declines of 12.2% and 16.2% respectively, despite significant operational milestones and substantial cash reserves. Archer has secured $1.7 billion and is ramping Midnight aircraft production for the 2028 Olympics, benefiting from governmental de-risking and a defense pivot, while Joby completed a historic piloted eVTOL flight and acquired Blade Air Mobility for demand, bolstered by Toyota's manufacturing expertise. Although both companies trade at elevated valuations with ongoing cash burn, these pullbacks are characterized as a healthy recalibration, with their long-term potential to redefine urban air mobility remaining robust.

Analysis

Despite recent share price declines of 12.2% for Archer Aviation (ACHR) and 16.2% for Joby Aviation (JOBY), both eVTOL companies have demonstrated significant operational progress, suggesting the pullback is a valuation recalibration rather than a deterioration of fundamentals. Archer has fortified its position with $1.7 billion in cash and is actively producing six Midnight aircraft, with its certification path significantly de-risked by its role as the official air taxi for the 2028 Olympics, which confers national priority status. Furthermore, Archer is diversifying revenue streams through a pivot to defense contracts and international partnerships in the UAE, Ethiopia, and Indonesia. Concurrently, Joby Aviation, holding $991 million in cash, achieved a key milestone with the first piloted eVTOL flight between public airports. Its strategy is centered on vertical integration, underscored by the acquisition of Blade Air Mobility to secure a built-in customer base and a strategic partnership with Toyota for manufacturing expertise. However, significant risks persist, including high valuations, a projected $500 million cash burn for Joby in 2025, and an industry-wide expectation of no profitability before 2027, positioning these as high-risk, venture-style investments with a multi-decade horizon.

Key Decisions for Investors

• Investors with a long-term horizon and high risk tolerance could consider the recent double-digit stock declines in Archer and Joby as a potential entry point, given the firms' continued progress on key operational and strategic milestones.
• It is crucial to assess the substantial financial risks, including high cash burn rates and the lack of profitability until at least 2027, and accordingly, positions should be sized as venture-style allocations within a diversified portfolio.
• Monitor progress toward FAA certification, Archer's ability to secure defense revenue, and Joby's integration of Blade Air Mobility, as these are critical catalysts that will validate the long-term investment thesis.
• Investors should weigh the distinct strategic paths: Archer's de-risking through government and military alignment versus Joby's vertical integration and manufacturing partnership with Toyota.