Some say a company’s share price is a fair guide to its present success or failure. Of course, this is nonsense during a bull market, where a particular trend (e.g the dotcom bubble in the late 1990s) can thrust minnows and antarctic blue whales together and send their equity to ridiculous highs, based on little more than froth, frenzy and furor, before crashing on the beach leaving many investors with broken dreams and empty pockets. The question being: will the eVTOL industry ever be caught up on a Tahiti Teahupoo wave?
At present, common sense prevails.
Three of the present eVTOL industry leaders, Joby, Archer and EHang, have all experienced equity rises in recent months after a dismal last few years. And these upticks are based on solid company development assisted by regular upbeat news.
A Tahiti Teahupoo Wave (Photo: Ben Thouard)
Archer is a good example.
As already stated on this website, the company can do no wrong, at present. The positive news just keeps on rolling assisted by a highly efficient Archer media machine.
In just the last few months alone, this coverage has ranged from a highly successful Paris Airshow including news of Archer/Stellantis manufacturing facility in Georgia, capable of initially producing 650 Midnight aircraft a year before scaling up to 2,300; the inspired appointment of former FAA Acting Administrator, Billy Nolen, to Archer’s Chief Safety Officer; a U.S Air Force contract worth close to USD142 Million, including delivery of up to six Midnight eVTOL aircraft; and a recent USD215 million investment from Stellantis, Boeing, United Airlines and Ark Investment Management which increases the present company’s total funding to USD1.1 billion.
With this calibre of news, it is no wonder Archer’s (ACHR) share price has risen from an all-time low of USD1.80 on December 23rd last year, to yesterday’s high of USD6.56. If you had bought shares close to Christmas, your investment, thanks to Santa, would now be showing over a 250% profit. Unfortunately, those investors who bought equity back in late 2021, where levels were USD10 or more, remain sitting on an uncomfortable loss.
Archer also has the kudos of being a darling of infamous Wall Street stock market investor, Cathie Wood, renowned for her belief in disruptive, up-and-coming technology stocks. At the height of her success in 2020, the 67 year-old was named best stock-picker by Bloomberg News, but then as technology shares fell out of favour, so did her portfolios.
Yet, 2023 has seen a remarkable phoenix-from-the-ashes come back from Wood, where her technology funds have dramatically outperformed the broader markets this year, as investors flock to buy undervalued tech and biotech stocks. An example is NVIDIA Corp, a semiconductor manufacturing company, where she is presently sitting on a 403% profit.
Wood’s various Ark Investment Funds (nine in total) have been important Archer shareholders since the eVTOL company floated on the NYSE back in September, 2021. Since then she has bought and sold the company shares at appropriate times. Wood plays a major role in the most recent PIPE (Private Investment in Public Equity) news. It is unclear the exact amount, but between April and July this year, she bought an additional 362,000 shares at a price range of between USD1.82 and USD4.60, leading to a 4.1% portfolio share increase. This recent investment echoes Warren Buffet’s famous motto, “Be fearful when others are greedy and greedy when others are fearful.”
It seems the present Archer share price rise is due for a fall, but when that happens is anyone’s guess. The high calibre news must take a breather at some point. Take a look at Joby where its value rose from a low of USD3.76 in late April to a high of USD10.69 in early July on the back of positive news, before falling to yesterday’s price of USD7.69.
Cathie Wood (Photo: Ark Invest)
EHang too has enjoyed a much needed fillip from a low of USD10 in late May to a high of USD22.66 on July 31st. It presently resides at USD21.16 per share. The last few months has certainly favoured the leading eVTOL companies and there is no reason why this can’t continue with bouts of profit-taking leading to dips in-between, so long as the all-important upbeat news rolls on.
Should you buy Archer shares? After the usual “do your own research and due diligence first”, probably YES, but timing is everything. If, on the other hand, you view such shares as a long-term investment, a USD6.56 means very little, for if there is a fall, you simply average down by purchasing more on the dip.
This leads to the question: Have the leading eVTOL companies seen the worst of their share price lows? Almost certainly YES, but to repeat, before buying, “Do your own research and due diligence first.”
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