Air Taxi Stock Archer Rebounds After Weak Results. Wall Street Isn’t Worried.

Recent Manufacturing progress of Archer’s Midnight aircraft in one of its Silicon Valley facilities (Courtesy Archer Aviation)

Shares of Archer Aviation clawed back early losses after the electric air taxi start-up reported a weaker-than-expected second-quarter loss.

Archer stock started the day down almost 10% in premarket trading, below $9 a share. It rebounded, adding 7.4% to close at $10.25, while the S&P 500 and Dow Jones Industrial Average rose 1.1%.

Despite the early dip, Wall Street didn’t see much to worry about in the numbers.

Monday, Archer reported a second-quarter operating loss of about $176 million. Analysts were projecting a $132 million loss, according to FactSet. Archer doesn’t generate sales yet, so the company spent a little more money than expected developing its electric vertical takeoff and landing, or eVTOL, aircraft that can be used to ferry passengers quietly on short trips.

The spending isn’t bothering the Street. For starters, the company ended the quarter with some $1.7 billion in total liquidity. Cantor Fitzgerald analyst Andres Sheppard was “encouraged” by the quarter and management’s plan to ramp up aircraft production. Archer has six of its Midnight eVTOLs in production currently. “We continue to expect the U.A.E. to be the initial market for Archer’s eVTOL commercialization after the company reaffirmed its timeline to commercialize in [the] fourth quarter [of] 2025,” Sheppard wrote in a report after earnings.

He rates Archer stock at Buy with a $13 price target. Deutsche Bank analyst Edison Yu also rates the shares at Buy but with a $15 price target.

“We could see several catalysts later this year changing the narrative [positively], including Archer showcasing more advanced flight testing and demonstrating further commercial traction in the U.A.E.,” Yu wrote following earnings. “Winning a defense contract would also be very positive, but our base case assumes that happening next year.”

Overall, 78% of analysts covering Archer stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Archer stock is about $12.75.

Coming into Tuesday trading, Archer stock was down 2% year to date, but up 169% over the past 12 months, with rising investor interest in shorter-haul, electric aviation. Shares of peer Joby Aviation are up 110% so far this year, and up 241% over the past 12 months.

Joby recently announced plans to purchase Blade Air Mobility’s air taxi business. Blade’s Medical division is not part of the transaction. The announcement pushed Blade stock up 17% on Aug. 4.

Write to Al Root at allen.root@dowjones.com