Shares of Sagittarius Aviation (NYSE: ACHR)the high-flying electric vertical take-off and landing (eVTOL) stock, withdrew afterward today JPMorgan Chase weighed on the stock and downgraded the rating from overweight to neutral due to valuation concerns and the belief that the market might get ahead of itself.
As of 11:58 a.m. ET, the stock was down 11.6% on the news.
JPMorgan says the shares traded as if the company had received full certification, which is not the case. The company views certification as a largely binary event, and it will be essential that its air taxis take flight.
JPMorgan also noted the recent partnership with defense technology startup Anduril and sees this as positive, but believes expectations for the stock have exceeded reality. It found the post-election rally overdone and acknowledged that the Trump administration poses some unforeseen risks and likely volatility.
In addition to the downgrade, JPMorgan lowered its price target for the stock from $9 to $6.
Shares of Archer and other eVTOL stocks Joby Aviation rose after the election, although it is not entirely clear why. Archer currently has no revenue as it is still a development stage company focused on an unproven new technology.
Analysts expect the company to start generating revenue later this year as it looks to launch new air routes in the United Arab Emirates.
The company enjoys the support of a number of major partners, including United Airlines And Stellantisbut the stock is highly speculative, especially because it lags behind rival Joby in terms of commercialization. At this point, JPMorgan’s caution is justified, as Archer has behaved like a meme stock.
New technology can easily be delayed or not meet expectations. Investors should wait for clearer signs of success before jumping into stocks.
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