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Archer Aviation’s 2025 Stock Decline Follows Air Taxi Partnership Announcements

Archer Aviation’s 2025 Stock Decline Follows Air Taxi Partnership Announcements
Archer Aviation, a pioneer in electric air taxis, has experienced significant stock volatility in 2025, prompting investors to reassess the company’s prospects. After an impressive surge of 198.1% over the past year and a remarkable 284.3% gain over three years, Archer’s shares have recently retreated, falling nearly 30% in the last month. This downturn coincides with the announcement of a strategic partnership with Korean Air aimed at commercializing Archer’s electric air taxis in South Korea, including a potential order of up to 100 aircraft.
While the deal signals Archer’s expanding global ambitions, market reactions have been mixed. Some investors remain cautious, expressing concerns about the company’s valuation and long-term growth potential amid ongoing cash burn and intensifying competition. The broader air taxi sector continues to evolve rapidly, with competitors such as Joby Aviation seeing share price gains fueled by positive options market activity. Regulatory clarity and the successful execution of commercial partnerships remain critical factors influencing investor confidence across the industry.
In response to these challenges, Archer has taken steps to strengthen its technological and strategic position. The company recently acquired patents from Lilium and forged a partnership with defense technology firm Anduril Industries. These moves are designed to enhance Archer’s intellectual property portfolio and solidify its competitive standing in the emerging urban air mobility market.
Valuation Approaches
A discounted cash flow (DCF) analysis offers insight into Archer’s long-term fundamentals by projecting future cash flows and discounting them to present value. Despite reporting a negative free cash flow of $472.3 million, reflecting substantial investment in growth and development, analysts anticipate a turnaround. Projections estimate free cash flow reaching $286 million by 2029, with potential to exceed $1.5 billion annually by 2035, though these figures are extrapolations based on aggressive growth assumptions. The two-stage DCF model values Archer’s shares at approximately $32.47 each, representing a 70.5% premium over the current market price and suggesting the stock may be undervalued if these growth trajectories materialize.
The price-to-book (P/B) ratio provides another perspective by comparing market price to net asset value. Archer currently trades at a P/B ratio of 3.67, reflecting investor expectations of growth balanced against the risks typical of early-stage, unprofitable companies. While a higher P/B ratio may be justified by confidence in the company’s intangible assets and future prospects, the inherent uncertainties in the sector also warrant caution.
Outlook
Archer Aviation’s recent stock decline underscores the complexities of operating within a rapidly evolving industry where technological innovation, strategic partnerships, and regulatory developments can swiftly influence market sentiment. Although valuation models indicate potential upside, the company’s ability to execute its ambitious plans and maintain a competitive edge remains under close scrutiny by investors and analysts alike.

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