Archer Aviation (NYSE:ACHR) closed Tuesday with a market capitalization of $4.05 billion, adding approximately $644 million over two days following the announcement of its Thunder aircraft program. The stock ended at $5.28, down 0.6%, after surging 19.6% on Monday. The estimate is based on Tuesday's implied share count and Friday's closing price.
Defense Sector Interest Drives Rally
The rally came after Archer revealed its partnership with private defense firm Anduril to develop the Thunder, a hybrid-electric vertical takeoff and landing (eVTOL) aircraft designed for military use. The Thunder is a Group 5 autonomous attack rotorcraft, though it has not yet flown and is not scheduled for its first flight until 2027. The announcement did not disclose the value of any contract or order, but it set a preliminary valuation for the defense business.
The $644 million gain represents 36% of Archer's cash and short-term investments as of the first quarter, which stood at $1.776 billion. It is also 3.7 times the company's adjusted EBITDA loss of $172.5 million for the same period.
Market Performance and Trading Activity
Archer and Joby Aviation (NYSE:JOBY) had moved closely together in the prior week, but Monday marked a significant divergence. Archer finished 16.3 percentage points ahead of Joby as small-cap stocks declined. On Tuesday, Archer slipped 0.6%, lagging behind the Russell 2000's 1.5% gain.
Trading volume surged dramatically. On Monday, 98.3 million shares changed hands, 3.9 times the average daily volume from July 13-17. Tuesday's volume remained more than double that recent average. According to Barron's, about 20% of Archer's shares were held short, creating potential for a short squeeze.
Thunder Aircraft and Partnership Details
The Thunder is a clean-sheet design, developed in collaboration with Anduril, a private defense company. CEO Adam Goldstein told Reuters, "They identified a need, and we built a very specific aircraft for that need." The companies have flown full-scale surrogate aircraft, but the Thunder itself has not yet taken flight.
Upcoming Catalysts and Financial Outlook
Next week, Archer plans to announce the initial commercial customers for its Midnight platform, which will provide an immediate valuation test. Investors will focus on order sizes and funding agreement specifics. The company's balance sheet has strengthened, but revenue remains minimal, with $1.6 million in first-quarter revenue and a net loss of $217.7 million. For the second quarter, Archer projects an adjusted EBITDA loss between $170 million and $200 million.
Risks remain high as Thunder has not flown and customer economics are undisclosed. Additionally, Midnight's FAA type certification is still pending. A soft order update could reverse some of the recent re-rating. Investors have already priced in a degree of success, and this week's reports need to demonstrate how much of that anticipated value is being converted to cash.
