How Should an Investor Play Archer Aviation Stock Pre-Q1 Earnings?

Core Viewpoint - Archer Aviation Inc. is expected to report a first-quarter loss of 21 cents per share, an improvement from a loss of 23 cents in the prior-year quarter, with an unchanged estimate over the past 60 days [1] Financial Performance - Archer Aviation has a history of unimpressive earnings surprises, beating estimates in two of the last four quarters, meeting once, and missing once, with an average negative surprise of 15.21% [1] - The company currently holds a Zacks Rank of 4 (Sell) and an Earnings ESP of 0.00%, indicating low chances of an earnings beat [2] Recent Developments - In February 2025, Archer Aviation launched a "Launch Edition" commercialization program for its Midnight eVTOL aircraft, with Abu Dhabi Aviation as its first customer [6] - Ethiopian Airlines signed an agreement in March 2025 for an initial fleet of Midnight aircraft in Africa, marking the second customer under the Launch Edition program [7] - The company has incurred significant expenses related to the development of the Midnight aircraft, which may negatively impact quarterly earnings [8] Operational Efficiency and Financial Position - Technological advancements in the Midnight jet development may provide operational efficiency, potentially aiding the quarterly bottom line [9] - Archer Aviation's liquidity position is strong, with approximately $1 billion in total liquidity following a $301.8 million equity raise [9] - The company received FAA certification for its pilot training academy, which may contribute positively to its first-quarter results [10] Stock Performance and Valuation - Archer Aviation's shares have declined by 12.5% year-to-date, underperforming the Zacks aerospace-defense industry, which gained 9.23% [11] - The company's return on equity (ROE) is significantly lower than that of its industry peers, indicating ongoing losses [12] Industry Context - The eVTOL aircraft market is still in its early stages, and Archer Aviation's long-term success depends on its ability to develop and certify these aircraft and the evolution of demand [15] - Public acceptance of eVTOLs may face challenges related to safety, noise, and affordability, which could constrain growth potential [16] - Industry challenges such as supply-chain disruptions and labor shortages may hinder Archer Aviation's project timelines [17]