Why Archer Aviation Stock Sank and Then Skyrocketed This Week

Archer Aviation (NYSE: ACHR) stock was highly volatile over the last week of trading, but managed to close out the period with a modest gain. The flying taxi company's share price ended the stretch up 1.3% from last week's market close, according to data from S&P Global Market Intelligence. Shares had been down as much as 13.4% in the week, but they rebounded thanks to big gains Friday.

Archer Aviation stock lost ground early in the week's trading amid a broader pullback for stocks with speculative valuations. But the flying electric-vehicle specialist's share price surged on Friday thanks to some big announcements and bullish coverage from analysts.

Archer Aviation stock bounces back from sell-offs

Responding to concerns about valuations and pending inflation data, investors became more cautious about speculative stocks early in this past week's trading. Archer Aviation stock has been on an incredible run, and the company's share price tumbled as investors shifted to take on less risk. But its share price didn't stay down for long.

On Thursday, founder and CEO Adam Goldstein said he believed that the company would see its first commercial flights in 2025. While the company's Midnight flying EVs have already completed test flights, they do not have regulatory approval in any markets yet and have not been flying commercially.

Additionally, the company announced that it was entering the defense industry through a partnership with Anduril and had received $430 million in funding to create flying EVs for defense purposes. The move appears to be targeted at landing a deal with the U.S. Department of Defense and could wind up being a major performance driver. Shares rose 17% in Friday's trading and allowed the stock to close out the week in the green.

What's next for Archer Aviation?

Deutsche Bank published new coverage on Archer Aviation stock following the flying vehicle specialist's announcements on Thursday. The firm maintained a buy rating on the stock and raised its one-year price target from $11 per share to $15 per share. Deutsche Bank's analysts see significant promise in Archer's push into the defense industry and believes that the new business could generate billions in revenue and be a major growth driver for the company. The firm's price target implies additional upside of 79% based on where Archer Aviation stock is today.

Canaccord also published bullish coverage on Archer on Friday, maintaining a buy rating and raising its one-year price target on the stock from $8.50 per share to $11 per share. While Canaccord's coverage suggested less upside compared to the recent note from Deutsche Bank, it still suggests additional upside of 31% from the current share price.

Archer Aviation now has a market capitalization of roughly $3.1 billion. While the business is still in a pre-revenue state, things appear to be falling into place for the company -- and 2025 could be the year that the company begins posting sales.

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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.