Archer Aviation (ACHR, Financial) experienced a noticeable decline in its stock price, falling by 9.38% in response to the company's announcement of issuing new shares. This proposed issuance aims to raise $70 million by selling new Class A common stock, sparking concerns about potential shareholder dilution.
Archer Aviation, currently pre-revenue, disclosed a third-quarter net loss of $115.3 million. To continue its development in the urban air mobility sector, Archer is in need of additional capital, hence the decision to issue new shares. By the end of the last quarter, the company had $501.7 million in cash and equivalents.
Since its public debut in 2021 through a SPAC merger, Archer has seen a significant increase in its share count by approximately 48%. Despite its financial struggles, the company is making strides towards commercialization with promising contracts in the UAE and Japan. A notable partnership includes a deal with Japan Airlines, which could potentially yield up to $500 million in revenue.
Currently, Archer Aviation's stock is priced at $4.22 with a market capitalization of $1.79 billion. The company exhibits a strong financial position with a current ratio of 4.49 and a cash-to-debt ratio of 7.59, indicating its ability to meet short-term obligations comfortably. However, the company's GF Value is labeled as "No Data," signifying that the stock cannot be accurately evaluated using the GF Value metric at this time.
Despite the recent financial disclosures and share issuance plan, Archer Aviation is poised to leverage its strong cash position as it moves toward revenue generation. Investors, however, should remain cautious about the potential risks associated with its pre-revenue status and ongoing need for capital.
