Farnborough Air Show gives eVTOLs a lift, but a long runway to profitability remains

Electric vertical take-off and landing (eVTOL) stocks are getting a lift Monday following developments at the biennial Farnborough Air Show, giving investors some hope that the segment is gaining ground in defense and commercial applications.

Gains are being driven by Archer Aviation (ACHR) and Anduril’s autonomous military tiltrotor aircraft, Thunder, designed to support attack, reconnaissance, and logistics missions while operating with crewed aircraft. The aircraft is designed to extend the range of military formations while reducing the risk to pilots in hostile airspace.

Archer (ACHR) shares were launched off the near two-year low of $4.30 per share to a high of $5.43, a gain of more than 26%.

At the same UK airshow, rival eVTOL aircraft designer  Vertical Aerospace (EVTL) completed a public demonstration flight of a vertical take-off before transitioning to a forward wingborne flight. The craft subsequently returned to vertical flight for its landing, displaying the commercial potential of eVTOL aircraft.

Vertical (EVTL) shares enjoyed a gain of 16% after also setting a record low on Friday.

The gains have not been isolated to Archer and Vertical, either, as EHang (EH) and Joby Aviation (JOBY) are also on the upswing from their respective multi-year lows set on Friday.

While the latest developments for Archer (ACHR) and Vertical (EVTL) lifted both stocks on Monday, the gains have done little to offset the sector's recent decline as investor appetite for eVTOL companies wanes.

As the leaders in the eVTOL industry, competitors Archer Aviation (ACHR) and Joby Aviation (JOBY) are both making the most promising strides towards a commercially viable aircraft.

Both companies boast high-profile airline partnerships—Archer with United Airlines (UAL), and Joby with Delta Air Lines (DAL). Both continue to advance towards FAA certification and have increased their production capabilities. 

But while both have a sizable war chest, investors remain wary over the industry’s capital-intensive business model, persistent cash burn, stock dilution, and uncertain path to profitability. These concerns have weighed heavily on valuations, with Archer (ACHR) down 60% year-over-year and Joby (JOBY) down 57%.

"Given the capex-heavy VTOL operations, I urge readers to temper their expectations on JOBY's future bottom-line performance, since it remains to be seen when the company may eventually report GAAP/cash flow profitability," warns Seeking Alpha analyst Juxtaposed Ideas. 

So for investors, as the hype cycle runs its course, execution now remains key.