Better Buy: Archer Aviation vs. Rocket Lab USA

Aerospace Industry Overview - Archer Aviation and Rocket Lab USA are both small aerospace companies that went public via SPAC mergers in 2021, but their stocks have declined significantly since their peaks, with Archer down 80% and Rocket Lab down 60% from their record highs [1] Archer Aviation - Archer produces electric vertical take-off and landing (eVTOL) aircraft designed to replace helicopters, offering advantages in cost, environmental impact, noise, speed, and landing ease [2] - The company's Midnight aircraft can carry small groups of passengers at speeds up to 150 mph for distances up to 100 miles, primarily targeting air taxi services [2] - Archer has secured significant contracts, including a $1 billion order from United Airlines for 200 eVTOL aircraft and a partnership with Stellantis for exclusive contract manufacturing [2] - The company delivered its first eVTOL aircraft to the U S Air Force in August 2023, but is expected to generate only$2 million in revenue for the year with a net loss of $454 million, well below its original 2024 revenue target of$42 million [3] - Archer has ambitious production targets, aiming for 10 aircraft in 2025, 48 in 2026, 252 in 2027, and 650 in 2028, with analysts projecting $40 million in revenue for 2025 and a net loss of$443 million [4] - The company faces financial challenges, with $360 million in cash and equivalents and$150 million in liabilities, and has increased its share count by nearly 50% since going public [4] Rocket Lab USA - Rocket Lab develops partially reusable orbital rockets, with its Electron rocket having completed 53 launches over seven years, capable of carrying payloads up to 250 kg [5] - The company is developing the Neutron rocket, expected to surpass SpaceX's Falcon with a maximum payload capacity of 15,000 kg when it launches next year [5] - Rocket Lab operates three dedicated launch pads and serves a diverse customer base including NASA, the U S Space Force, and various national space agencies and private companies [5] - The company has shown strong revenue growth, increasing from $35 million in 2020 to$245 million in 2023, though slightly missing its pre-merger target of $267 million [6] - Rocket Lab's adjusted EBITDA margin was negative 37$425 million in 2024 and 40% to $597 million in 2025, with net losses of$189 million and $124 million respectively [6] - Rocket Lab has$345 million in cash and equivalents but $733 million in liabilities, and has increased its share count by only 11$920 million, trading at 23 times next year's sales, while Rocket Lab has an enterprise value of $4 3 billion, trading at seven times next year's sales [8] - Rocket Lab is considered a better investment due to its more stable business, lower valuation, and less aggressive share dilution compared to Archer [8]