Archer Aviation Stock Plummets Over 30% From Peak: Buying Opportunity or Trap?

Archer Aviation shares nosedive more than 30% from their 52-week high—creating turbulence for investors watching the electric aircraft space.

The Price Plunge

That staggering drop from peak valuation makes traditional aviation stocks look stable by comparison. While legacy airlines worry about fuel costs, Archer's volatility operates on a different altitude entirely.

Market Mechanics

This isn't just normal market fluctuation—it's the kind of correction that separates speculative momentum from fundamental value. The electric vertical takeoff landscape remains crowded with promises and light on delivered revenue.

Timing the Trade

Buying during a steep decline requires either brilliant contrarian instinct or reckless timing. With aviation tech, the difference often only becomes clear once you've already boarded the flight.

Wall Street's favorite game: dressing up speculative bets as 'strategic long-term plays' while retail investors provide the exit liquidity.

Image source: Getty Images.

Commercialization could trigger a rally for the stock

The big catalyst that many investors are eagerly awaiting is for Archer to start carrying passengers and begin commercialization. Not only could that allow the business to start generating a steady stream of revenue, but it WOULD also showcase the aircraft and prove that it may be a viable solution to traffic problems in congested cities.

Archer has been working on certifying its Midnight aircraft with regulators and it may begin providing regular air taxi services sometime next year. A big opportunity is in big markets such as Los Angeles, where traffic is a massive problem. Archer has been named the "Official Air Tax Provider of the LA28 Olympic Games," which will be a great opportunity to show off its capabilities to the world in a few years.

It has also delivered aircraft to the United Arab Emirates and begun a flight test program there, as that may be one of the first markets it enters.

This is the big question mark around Archer's business

There is no doubt there is a need to ease congestion in big cities, and eVTOLs can potentially play a part in the solution. They are environmentally friendlier options as they have zero emissions, and many businesses are eager to get involved; Archer's order book is up to around $6 billion, suggesting incredible demand for the aircraft already.

But the big question mark is whether this can turn into a profitable, sustainable business. And that will likely take a long time to answer (i.e., years). Commercial airplane manufacturer, for example, has often struggled to generate a gross profit margin that is more than 10%.

And the piloted Midnight can transport just four passengers; for that to be a big part of its business, Archer would need to scale significantly to generate a lot of revenue while still offering affordable prices for its customers. During that time, its costs would skyrocket, which means investors should brace for not just losses but also frequent stock offerings and dilution.

Archer's stock may look cheaper, but it's still full of risk

Over the past 12 months, Archer's stock has tripled in value, and many investors may be cashing out their profits right now, hence the recent decline. However, the stock is still highly valued despite it not generating any consistent revenue, and without a clear path to profitability.

Archer remains a speculative stock at this stage and it should be treated as such. This is an investment that is primarily suitable for investors with a high risk tolerance and who can afford to lose most or all of their investment. If you're going to invest in Archer, you may also want to consider rounding out the rest of your portfolio with safer stocks orindex funds to balance out your risk.