Archer Aviation (ACHR) stock rose 6% thanks to institutional buying and regulatory progress

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TLDR

• Seven Grand Managers LLC purchased 3 million shares of ACHR stock worth approximately $22.56 million in the 4th quarter.
• The stock opened at $6.53 on Thursday, up about 6.56% on the day
• Archer reported Q1 EPS of -$0.28, beating the estimate of -$0.25; Revenue was $1.60 million versus $1.66 million expected
• Progressing towards FAA certification and entering the UAE Air Taxi Approval Program helps boost morale.
• The consensus analyst rating is “Moderate Buy” with an average price target of $11.83

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Archer Aviation (ACHR) stock jumped 6.56% on Thursday, opening at $6.53, after Seven Grand Managers LLC disclosed a new 3 million share position in the eVTOL company worth approximately $22.56 million.

Archer Aviation Company, ACHR

The stake represents about 0.46% of the company and is the fund’s 17th largest holding. It represents approximately 1.7% of Seven Grand Managers’ total portfolio.

The move comes despite a mixed first-quarter earnings report released on May 11. Archer reported an EPS loss of $0.28, which was larger than the expected loss of $0.25. Revenue was $1.60 million, just below the consensus estimate of $1.66 million.

This is a larger loss compared to the same period last year, when the company reported earnings per share of -$0.17. Analysts expect full-year EPS of -$1.51 for the current fiscal year.

However, investors seem to be more focused on the regulatory picture than the numbers.

The Federal Aviation Administration (FAA) and the UAE are leading the way in morale leadership

Archer The company has made progress in obtaining Federal Aviation Administration (FAA) certification, and recently entered the UAE’s air taxi approval program. Both developments are seen as concrete steps towards commercial operations.

These milestones give the bulls something to work with, even as the financials remain very negative.

Institutional ownership currently stands at 59.34% of the company. Other funds have also increased exposure – Jackson Hole Trust raised its position by 45.9% in the third quarter, and Financial Planning Center raised its stake by 138.8% in the same period.

Insiders sell in the rally

Not everyone buys. Insiders have been active sellers over the last 90 days, offloading 502,739 shares worth about $3.12 million.

CAO Harsh Rungta sold 22,826 shares at $6.46 per share on March 5, reducing his position by 25.86%. Insider Eric Lentell sold 48,169 shares at $5.95 on May 18, also reducing his stake by about 25%. Both sales were linked to tax withholding when stock awards were granted.

Company insiders collectively own 7.65% of the shares.

From analysts’ perspective, the picture is mixed. Canaccord Genuity cut its price target from $13 to $12 on May 12 while maintaining a “buy” rating. Needham lowered its target from $10 to $9 on March 3, and also maintained a “buy.” Weiss Ratings has a “sell” rating on the stock.

The consensus is at “Moderate Buy” with an average price target of $11.83 – well above the current trading level.

The 12-month ACHR range is $4.80 to $14.62. Its 50 day moving average is $5.87 and its 200 day moving average is $7.05. The stock has a beta of 3.13, which reflects its volatility.

The company has a current ratio of 18.06 and a debt-to-equity ratio of just 0.06, indicating that it is not highly leveraged.

Year to date, ACHR stock is down about 12.90%, though Thursday’s move is one of its strongest single-day gains in recent weeks.

The stock’s market capitalization is about $4.94 billion.