Shares of air taxi developer Archer Aviation fell nearly 24% on Monday, December 2. Investors were likely spooked by the sudden resignation of the CEO of Stellantis, a major investor in Archer, reports Barron’s.
Details
On Monday, Archer Aviation stock dropped 23.7% on the New York Stock Exchange to close at $7.30 per share. In premarket trading today, Tuesday, December 3, the losses have continued.
Barron’s suggests that investors were likely unsettled by the abrupt departure of Carlos Tavares as CEO of automaker Stellantis, which is a big investor in Archer. In August, Stellantis — known for brands like Chrysler, Jeep, and Fiat — committed up to $400 million to help scale Archer’s production of aircraft. The company also agreed to cover certain capital expenditures and labor costs through 2030. Additionally, Stellantis participated in a $230 million funding round for Archer. The resignation has raised concerns about the future of their partnership, Barron’s writes.
Context
Tavares’ resignation was announced on the evening of Sunday, December 1. Stellantis shares plunged to their lowest level in almost two and a half years the following day. According to Senior Independent Director Henri de Castries, the departure was a result of disagreements between Tavares, the board, and key shareholders, as stated in Stellantis’ press release. A new CEO is expected to be appointed in the first half of 2025. Until then, an executive committee will be run by John Elkann.
What Archer does
Archer Aviation, with a market capitalization of $3.1 billion, develops electric vertical takeoff and landing (eVTOL) aircraft. These battery-powered vehicles operate like helicopters and can transport up to 12 passengers over distances of approximately 100 miles (161 kilometers).
Although Archer’s technology is not yet operational, the company has over $6 billion in preorders. Apart from Stellantis, its partners also include major airlines such as Southwest and United. Currently, Archer is working to secure certifications required to launch passenger services in major cities worldwide.
The U.S. Federal Aviation Administration (FAA) is not expected to issue permits for these new vehicles until at least 2026, with air taxi services anticipated to launch by 2028, according to Barron’s. Meanwhile, competitors are hot on Archer’s heels. Today, Archer’s rival Joby Aviation received FAA approval to begin training pilots for its air taxis, a critical step toward launching commercial flights. Overall, Morgan Stanley projects that the global urban air mobility market could exceed $1 trillion by 2040.
Analyst insights
According to MarketWatch, eight analysts currently track Archer Aviation. Of them, seven rate the stock as a “buy,” and one recommends holding it. Their average target price is $9.61 per share, 31% above the last closing price.
In November, the research outfit Needham initiated coverage of Archer with a “buy” rating, prompting a surge in the stock. Overall, Archer shares soared 204% in November, though the recent selloff has erased some of these gains, Barron’s reports.
Barron’s also noted that Archer was not the only company in the sector to retreat on Monday: Joby Aviation lost 9.4%, while space startups Rocket Lab USA and Intuitive Machines fell around 11.0%. Shares of drone manufacturer Unusual Machines were off nearly 20%, following two consecutive sessions with massive gains — 89% and 85% — after the news broke that Donald Trump Jr. had joined its advisory board.
