It’s been an up-and-down year for speculative growth stocks.
Flying taxi maker Archer Aviation(NYSE: ACHR) plans to launch in the United Arab Emirates (UAE) as soon as next year, which would bring its electric vertical takeoff and landing (eVTOL) vehicles to paying customers for the first time. Archer Aviation stock surged, reaching over $14 per share, but has since fallen 41%.
While Archer declines, one space company continues its ascent: AST SpaceMobile(NASDAQ: ASTS). Up 284% year to date, AST SpaceMobile is trading higher after securing major deals with leading communications companies and making progress in launching its satellites.
If you’re a growth-focused investor deciding between Archer Aviation and AST SpaceMobile, here’s what you need to know.
Image source: Getty Images.
Archer Aviation is developing innovative technology that could transform urban transportation. The company is developing eVTOL aircraft, which use electric propulsion and vertical takeoff, are quiet enough for city transportation, and maintain a low emissions profile.
This technology is exciting, but it faces significant hurdles. In the near future, Archer plans to launch commercial operations in the UAE. The company hopes to obtain the necessary certifications to begin operations there by the second half of next year.
Then there is the issue of certification in the United States. Archer still needs to obtain type certification from the Federal Aviation Administration (FAA). This certification is required for new aircraft designs and covers all required components and parts. This is a four-part process, and Archer is currently in the fourth and final phase of testing and analysis to ensure it meets the necessary requirements.
Once it has certification, the next step is to begin commercial operations and scale up. It’s one thing to build a prototype and get it tested and certified. It’s another to ramp up production so that you can operate at scale, where supply chains, quality control, and unit economics are untested.
Not only that, but Archer faces heightened competition from Joby Aviation and others, like Boeing, which is developing and working toward certification for its Wisk Aero aircraft.
Archer Aviation’s flying taxis are exciting and could change transportation as we know it. But the idea remains untested at scale, and there is a question about how quickly customers will accept the technology. Right now, Archer is burning cash, and its investment thesis will take several years to play out. Unless you’re a more aggressive investor with a long-term horizon (a decade or more), it may not be for you.
AST SpaceMobile is a satellite company that aims to enable satellite-based cellphone communication without specialized software. The company’s BlueBird satellites feature large communication arrays designed to provide high-speed connectivity directly to standard, unmodified smartphones.
What makes AST compelling is the large deals it has secured with major communications companies over the past year. Last year, it secured an agreement with AT&T to use its space-based network to provide broadband coverage for standard cellphones through 2030.
It also secured a $100 million deal with Verizon Communications, including $65 million in prepayments, for service starting in 2026. AST SpaceMobile also acts as a prime contractor for the Space Development Agency (SDA) and has secured a $43 million contract for specialized government and defense applications.
The company is currently deploying its BlueBird satellites and expects to send satellites into orbit every 45 days throughout next year. The company hopes to have somewhere between 45 and 60 satellites in orbit by the end of 2026. In the long term, it envisions 90 satellites to achieve global connectivity.
Archer Aviation’s eVTOL aircraft is exciting and has the potential to transform transportation. Its battery-powered aircraft could solve rush-hour gridlock. However, the concept is still in its early stages and unproven, and it may take several years to unfold.
On the flip side, AST SpaceMobile has secured several major deals, providing it with visibility into future cash flow. Not only that, but smart investors see the vast potential in the space economy. According to McKinsey and Company, the space economy will reach $1.8 trillion by 2035.
For investors looking to buy today, AST SpaceMobile is further along in its development, making it a better growth stock to scoop up right now.
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Courtney Carlsen has positions in Archer Aviation and Joby Aviation. The Motley Fool has positions in and recommends Boeing. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
