Why Archer Aviation Stock Is Soaring Today

Archer Aviation (NYSE: ACHR) stock is making big gains in Thursday's trading. The company's share price was up 11.4% as of 3:30 p.m. ET and had been up as much as 13.7% earlier in the day's session.

Before the market opened this morning, Archer Aviation published a press release announcing that it has entered into agreements to bring its advanced air mobility services to the Japanese market. Through the deal, Archer could wind up selling up to 100 of its Midnight aircraft to Soracle -- a joint venture company held between Japan Airlines and Sumitomo Corporation.

Archer's latest deal could be worth up to $500 million

As part of its deal with Archer Aviation, Soracle has secured the right to purchase up to 100 of the company's Midnight flying vehicles. If Soracle moves ahead with the full purchase, it would mean roughly $500 million in sales for Archer. The two companies will be working together to obtain permissions and certifications from the Japanese Civil Aviation Bureau, and they plan to hold a public flight demonstration at the World Expo in the near future.

What comes next for Archer Aviation?

Archer Aviation is scheduled to publish its third-quarter earnings results and host a conference call after the stock market closes today. With its last quarterly report, the business was still in a pre-revenue state. But it looks like the company is rapidly moving toward commercialization, and sales of its Midnight aircraft could soon begin showing up on the business's financial reports.

While the contract with Soracle doesn't guarantee that the deal will generate the full $500 million in potential sales that have been outlined, it's undoubtedly a bullish development for Archer. The company has been racking up some encouraging partnerships, and the Soracle deal is a promising indication that the business is getting closer to recording meaningful revenue.

With a market capitalization of roughly $1.2 billion, Archer undeniably has a highly growth-dependent valuation. But the business is an early leader in an emerging category, and it could wind up delivering big returns for investors if it continues to score wins in the space.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.