What does the financial industry think about the current state of the Urban Air Mobility movement and the prospects for a successful eVTOL (electronic vertical take-off and landing) company? Advisors at The Motley Fool (TMV) compared the growth potential of an investment in Archer Aviation, developer of the promising Midnight eVTOL, to the prospects of making a killing with Viking Therapeutics, a pharmaceutical company developing a weight-loss drug known as VK2735.
After listing off a series of key financial data points (for its viewers), TMV described Archer’s strategy as a combination of “launching an aviation ride-share platform” and selling aircraft to “selected partners.” TMF notes that Archer is currently “racing to clear significant regulatory hurdles that could determine its long-term success,” but this may be an overly simplistic assessment of a complex business plan.
As for hard monetary figures, TMF reports that Archer’s most recent cash and cash equivalents were $405 million, but also notes that the company lost $116.5 million in the first quarter of 2024, which it attributed to the fact that “innovation is costly.”
While TMF rates the eVTOL industry’s potential as “staggering,” with “analysts” estimating the market potential at trillions of dollars, the finance website notes that the payoff likely won’t come until 2040 or later, making Archer’s long-term upside potential difficult for investors today to quantify. TMF adds: “While the road to profitability may be long, Archer’s position as a pioneer in this potentially transformative industry is a strong driver of growth.” Interesting [italics added by AVweb] This is an opportunity for investors with a long-term perspective and a high risk tolerance.”
In response, TMF calls weight-loss drug developer Viking “a serious contender in this high-value category.” But while Wall Street analysts quoted in the article suggest VK2735 could generate more than $10 billion in sales by the mid-2030s, a decade before Archer is expected to start turning a financial profit, TMF cautions that “much of this potential value depends on big pharma companies entering the space through acquisitions or collaboration agreements.”
So drum roll: Who will win the Motley Fool investing showdown?
“Archer Aviation is targeting one of the largest untapped markets on the planet, and although there are many competitors, this eVTOL company is a leader in the field. Viking Therapeutics, on the other hand, may need the backing of a larger partner to reach its full potential. That brings an element of risk into the equation, giving Archer Aviation the advantage in this comparison.”
