Cramer Sounds Alarm on Archer Aviation, Warns of 'Speculative Tsunami'
CNBC host advises investors to avoid the eVTOL stock, citing excessive speculation despite recent operational advancements.
Shares of Archer Aviation (ACHR) are under pressure after influential CNBC host Jim Cramer issued a stark warning to investors, advising them to steer clear of the high-flying electric aircraft developer. Citing a 'speculative tsunami' surrounding the stock, Cramer's cautionary comments have cast a shadow over a company that has otherwise been a darling of the burgeoning electric vertical takeoff and landing (eVTOL) market.
The negative commentary from such a high-profile market personality introduces significant headwinds for Archer, a stock that has been fueled by intense retail investor interest and speculative buzz. could trigger a sell-off among investors who are sensitive to shifts in market sentiment, particularly in names with high valuations and pre-revenue business models.
Archer's stock has been on a wild ride, recently experiencing dramatic surges fueled by rumors of a potential partnership with Tesla. The speculation sent the company's market capitalization soaring, with its stock year-to-date at one point. However, the lack of a formal announcement from Tesla led to a swift reversal, highlighting the volatility inherent in the stock that Cramer cautioned against.
Despite the speculative frenzy, Archer has made tangible progress in its quest to commercialize its 'Midnight' air taxi. The company has achieved critical milestones, including successful public flight demonstrations and securing key FAA certifications for pilot training and commercial operations. Furthermore, Archer has forged significant global partnerships, including a deal to establish the UAE's first hospital-based vertiport and an agreement with Japan Airlines to supply .
However, the financial realities of the company underpin Cramer's cautious stance. Archer remains a pre-revenue company and reported a GAAP net loss of $206 million in its most recent quarter. While the company boasts a strong liquidity position, the widening losses underscore the long and capital-intensive road to profitability.
For investors, Cramer's warning presents a classic conflict between speculative potential and fundamental risk. While Wall Street analysts maintain a consensus 'Strong Buy' rating on Archer, buoyed by its technological progress and partnerships, the CNBC host's alert serves as a potent reminder of the dangers of chasing momentum in a market sector where valuations have become detached from current financial performance. The 'speculative tsunami' Cramer described may have propelled Archer to new heights, but it also carries the risk of a powerful undertow.