Shares of Air force gunner (NYSE: ACHR)high-flying electric vertical takeoff and landing (eVTOL) glass, they retired today after JPMorgan Chase weighed on the stock, downgrading its rating from overweight to neutral due to valuation concerns as well as a belief that the market may be getting ahead of itself.
As of 11:58 a.m. ET, the stock was down 11.6% on the news.
JPMorgan says the stock traded as if the company had received full certification, which it did not. The company sees the certification as a largely binary event and will be critical to the flight of its air taxis.
JPMorgan also highlighted its recent partnership with defense technology start-up Andurila, seeing it as a positive, but believes that expectations for the stock have exceeded reality. The post-election rally was seen as overdone, acknowledging that the Trump administration poses some unforeseen risks and likely volatility.
Along with the downgrade, JPMorgan lowered its price target on the stock from $9 to $6.
Archer shares and other eVTOL shares Joby Aviation jumped after the election, although it is not entirely clear why. Archer doesn’t income currently, as it is still a development stage company focusing on unproven new technology.
Analysts expect the company to start generating revenue later this year, as it aims to launch new airlines in the United Arab Emirates.
The company enjoys the support of a number of major partners, including United Airlines and Stellantisbut the stock is highly speculative, especially since it is behind rival Joby in commercialization. At this point, JPMorgan’s caution is warranted, as Archer has behaved like a stock meme.
New technology could easily be delayed or fall short of expectations. Investors should wait for clearer signs of success before jumping into the stock.
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