What does the financial industry think of the current state of the Urban Air Mobility movement and prospects for a successful eVTOL (electronic Vertical Takeoff and Landing) company? Advisors at The Motley Fool (TMV) compared the growth potential of investing in Archer Aviation, developer of the Midnight eVTOL hopeful, with prospects for making a killing with Viking Therapeutics, a pharmaceutical company developing a weight-loss drug known as VK2735.
After listing a series of key financial data points (speaking to their audience), TMV described Archer’s strategy as a combination of “launching an aerial ride-sharing platform” and selling aircraft to “select partners.” TMF notes that Archer is currently “racing to clear crucial regulatory hurdles that may determine its long-term success,” perhaps an oversimplified assessment of a complex business plan.
As for the down-and-dirty money numbers, TMF cites Archer’s most recent reported cash and cash equivalents as $405 million, while also noting the company lost $116.5 million in the first quarter of 2024—losses attributed to the fact that “innovation is costly.”
While TMF counts the potential for the eVTOL industry as “staggering,” with market potential estimated by “analysts” as in the trillions of dollars, the financial website notes that the payoff is likely to come sometime after 2040, making it challenging for today’s investors to quantify Archer’s long-term upside potential. TMF concludes, “While the journey to profitability may be long, Archer’s position as an early mover in this potentially transformative industry presents an intriguing [italics added by AVweb] opportunity for investors with a long-term perspective and high risk tolerance.”
In comparison, TMF calls weight-loss drug developer Viking a “real contender in this high-value category.” But, while Wall Street analysts cited in the post suggest VK2735 could generate more than $10 billion in sales by the middle of the 2030s, a decade before Archer is projected to begin to return fiscal gold, TMF warns, “Most of this latent value is predicated upon big pharma stepping into the picture through either a buyout or partnering deal.”
So, drum roll, who’s the winner in The Motley Fool’s investment shootout?
“Archer Aviation is targeting one of the largest untapped markets on the planet, and while there are a lot of competitors, this eVTOL player is a leader in the space. Viking Therapeutics, on the other hand, may require a helping hand from a big partner to realize its full potential. That introduces an element of risk into the equation that gives the edge to Archer Aviation in this comparison.”
