Archer Aviation Inc. (NYSE: ACHR) announced on Friday that the New York Stock Exchange has halted trading in its public warrants, which are set to expire on September 16. The company's common stock remains listed and continues to trade normally, a distinction that has caused some confusion among investors.
The halt, effective September 1, was disclosed in a Form 8-K filed with the Securities and Exchange Commission. While the filing references a delisting item, it applies specifically to the warrants (ticker: ACHR WS), not the common shares that most shareholders hold.
The warrants are significantly out of the money. Each warrant entitles the holder to purchase one share of Archer common stock at an exercise price of $11.50. As of Friday's close, the stock was trading at $5.71, down 0.9% on the day. This means the shares would need to rally more than 100% to reach the exercise price, making exercise highly unlikely for most holders.
The expiration of these warrants could eliminate the potential issuance of 25.4 million shares, which would have represented about 3.3% of Archer's current share count of 770 million. However, it also means forgoing up to $292 million in theoretical exercise proceeds—a figure that is simple arithmetic, not a forecast of actual cash flow.
According to Archer's June 30 quarterly report, there were 17.4 million public warrants and 8 million private-placement warrants outstanding. The private warrants may be exercised on a cashless basis under certain conditions, which could reduce the actual proceeds. Public warrant holders also paid a premium when they purchased the warrants, raising their effective break-even above the $11.50 strike price.
The NYSE has set a timeline for the warrants: trading was halted on September 1, formal suspension will occur before the market opens on September 15, and all unexercised warrants become void at 5 p.m. New York time on September 16. Investors should be aware that brokers may impose earlier deadlines for exercise, so it's crucial to check with their brokerage for specific cutoffs.
The accounting impact of the warrants has been shrinking. Archer valued its warrant liabilities at $3 million as of June 30, down from $29.9 million at the end of last year, resulting in a $26.9 million non-cash gain in the first half of the year. This gain reflects the declining fair value of the liability and is not indicative of operating performance.
Archer ended the second quarter with $1.56 billion in cash and short-term investments, but its cash burn remains significant: operating cash flow was negative $305.5 million in the first half, and the company posted a net loss of $263.2 million in Q2. Revenue was just $5 million, underscoring its pre-commercialization stage.
The company is focused on advancing its Midnight aircraft, which completed 70 test flights in August. The 'No Roads' tour aims to showcase the aircraft to government and airline partners ahead of planned early U.S. operations and the 2028 Los Angeles Olympics. The warrant expiration is a balance-sheet cleanup event, not a reflection of operational progress.
Investors should monitor the ACHR ticker for the common stock and not confuse it with the warrants. While the expiration removes a potential overhang, it does not change the fundamental risks related to certification, manufacturing, or demand. Archer may still issue shares through other securities or transactions in the future.
