Sign InArcher Aviation Sees 250% Gain in Shares, but Remains Speculative and Faces Investor Scrutiny
Summary
Archer Aviation Inc.'s shares have seen significant gains in 2023, but the company remains speculative with negative earnings and no significant revenue streams, drawing attention from short sellers and raising concerns about insider sentiment, while technical analysis suggests a bullish trend and potential breakout if the stock surpasses resistance at $7.
Fundamental Analysis of Archer Aviation Inc. (ACHR)
Archer Aviation Inc.'s shares trend sharply higher in 2023, with gains of over 250%. Despite the impressive run, Archer Aviation, with a negative EPS of -$1.98 and PE at -3.34, remains a speculative enterprise. The company does not yet have significant revenue streams and is yet to demonstrate profitability, ranking 70th in the Aerospace & Defense sector despite a market cap of $1.88 billion.
The company has drawn attention from short sellers. Also worth noting is its founder, Brett Adcock, selling his stocks recently, triggering what seems to be increased investor scrutiny. This action tends to elevate investment risk and might suggest insiders are doubtful of the company's future performance.
Archer Aviation's DCF stands at $6.91, which is a tad lower than its last close at $6.97, indicating potential overvaluation. However, it seems that analyst sentiment is leaning towards a positive bias, with a consensus rating of "Buy" and a target median of $4. Yet, considering the company's highly speculative status, the "Buy" sentiment could reflect risk tolerance rather than fundamental assessment.
Technical Analysis for ACHR
The ACHR stock closed at $6.97 as of August 31, 2023, up by 0.58%. The stock hit a high of $7.32 and a low of $6.9 during the trading day, indicating ample volatility. The 14-day Relative Strength Index (RSI) stands at 61, signaling neither an overbought nor oversold condition.
The stock is performing above its 50-day moving average (MA) of $5.36 and the 200-day MA of $3.29, revealing a bullish trend setting in. The positive MACD further strengthens this upward trend. The stock's Average True Range (ATR) is 9.69, pointing to volatility, while the stop-loss level is identified at $6.64.
The stock has a strong support at around $6.73. However, it has been flirting with the resistance measured at $7, possibly indicating an upcoming breakout if the momentum carries on.
Forecast for Upcoming Trading Day and Week
With current momentum, ACHR may start the trading session on September 01, 2023, in the positive territory. If the stock breaches the resistance at $7, with high volumes, it may look to consolidate and continue its upward move throughout the week. However, if it fails to move past that level, a pullback towards the support level of $6.73 can be expected based on price action.
Evaluation of ACHR Stock
ACHR stock presents a mixed bag of indicators. Positives include the bullish trend, the MACD above zero, and outperformance of MA's, contrasted by a strong bearish element of short-selling interest and insider selling. Given the speculative nature of the stock and the heightened risk levels, ACHR should be a "Hold". The company has potential, but until proven profitability and consistent revenues are demonstrated, investment caution is warranted. Long-term investors who are not risk-averse may hold the stock as part of a diversified portfolio while waiting for the company's strategic plans to mature.
