Palantir Technologies (pltr 6.56%)) It has been one of the top AI stocks owned in recent years. And when it partners with a business, it can be a great sign for startups.
In March, Palantir announced a contract to cooperate Archer Airlines (ACHR) 8.76%))helps to expand manufacturing capacity and helps to place it for long-term growth. Can Palantir work with Archer to become the next big growth stock to invest in?
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Will Archer become famous in the aviation taxi industry?
Archer is in the business of developing electric vertical takeoff and landing (EVTOL) aircraft that transports transportation headaches and in some cases transport people in major cities such as New York and Los Angeles. It is the early stages of producing midnight aircraft, and by the end of this year, its goal is to ensure that at least two can be manufactured on the month.
Helping companies improve their processes by leveraging Palantir's AI tools can help their companies achieve their goals. By 2030, Archer hopes to build 650 aircraft per year.
The company was named the official air taxi provider for the 2028 Olympic Games in Los Angeles. The powerful show there was able to legalize Archer's business model to a much wider range of consumers and investors. The key is that by then you will produce enough EVTOL (only four passengers can be transported at midnight) and are ready to go to the game.
But even before that, and as early as this summer, the company hopes to deliver midnight aircraft (pilot) to the United Arab Emirates. Achieving that goal is another good sign of progress for investors.
There is plenty of risk in stock
The clear risk of Archer's stock at this early stage is that it has not yet generated revenue and its losses are piling up. During the first three months of the year, the company suffered an operating loss of $144 million compared to $142.2 million year-on-year. The danger is that if a company expands operations and starts producing aircraft at speed, its costs can rise rapidly.
The good news is that the company is well funded with over $1 billion in cash in the book. During the first three months of the year, I spent $94.6 million in the course of my daily sales activities. For now, it appears that there is enough runway for the business to grow, but when production actually increases, we see what its operating expenses and cash burns look like, and that margin is on the aircraft.
Do you buy Archer Stock today?
Over the past 12 months, Archer's stock has skyrocketed 200%, pushing its market capitalization to over $5 billion. This is for businesses that are not yet making revenue and are in the early stages of production. With this type of assessment, investors have made a huge leap of faith in their business and are never certain that they can scale effectively and efficiently. Also, investors should not read much about their partnership with Palantir. This is because it does not necessarily lead to significant profits or cost savings for Archer.
In the long term, the aviation taxi industry has important market opportunities for Archers, but it relies heavily on its deployment and production, and the effectiveness of the aircraft. For now, there is still a considerable amount of uncertainty and risk in the business, so I recommend waiting for the bystanders to see how things unfold. Such a high rating does not have a safe range for investors.
David Jagielski has no position in any of the stocks mentioned. Motley Fools is located in Palantir Technologies and recommends. Motley Fools have a disclosure policy.
