Archer tanks 12% after air taxi maker sells additional 85 million shares, buys LA-area airport

Archer Aviation's shares dropped 12% following the announcement of a substantial stock sale, which overshadowed its narrower-than-anticipated loss for the third quarter. The company reported a net loss of $129.9 million, significantly better than the FactSet forecast of a $178.6 million loss. In a strategic move, Archer revealed a $650 million stock offering involving 81.25 million shares to finance its acquisition of Hawthorne Airport in Los Angeles, which will serve as a base for its air taxi operations. This positioning comes as Archer prepares to be the official air taxi provider for the upcoming 2028 Olympics in Los Angeles. However, this stock issuance is expected to dilute the value for current shareholders, with the total number of outstanding shares increasing from 397.5 million to approximately 660.9 million over the past year. Interest in electric aircraft manufacturers has surged recently, with many companies nearing certification. Notably, Beta Technologies made its debut on the NYSE this week. Archer, along with its rivals, is making significant strides toward obtaining Federal Aviation Administration (FAA) certification, a crucial step for commercial operations. In September, the company announced that its Midnight aircraft had achieved a record altitude of 7,000 feet, shortly after completing its longest piloted flight. Archer is also focusing on the United Arab Emirates for expanding its air taxi services, while competitor Joby Aviation is collaborating with Saudi Arabia. For the upcoming quarter, Archer anticipates a loss between $110 million and $140 million, with the midpoint loss projected at $125 million, which is slightly worse than analysts' expectations of $119.9 million. In the backdrop of these developments, Joby Aviation has reported a wider-than-expected loss for the third quarter. Over the past week, Archer's stock has seen a 20% decline, losing almost a third of its value overall, despite both companies having more than doubled their stock prices in the last year.