California-based eVTOL, or electric vertical takeoff and landing aircraft maker, Archer Aviation Inc. (NYSE:ACHR) announced a significant new deal to supply its powertrains to the lucrative defense industry, but the stock witnessed a pullback nonetheless.
Powertrain Supply To The Defense Industry
On Monday, the company announced that it will be supplying its proprietary electric powertrain technology to leading defense contractor Anduril Industries, led by Palmer Luckey and UAE-based EDGE Group, marking the company’s first third-party powertrain deal and a strategic expansion into the defense sector.
The powertrain, developed for Archer's Midnight eVTOL aircraft, will now be used in Anduril's Omen Autonomous Air Vehicle, a hover-to-cruise drone co-developed with EDGE Group.
The UAE has committed to acquiring an initial batch of 50 Omen systems, creating a strong demand signal for the aviation company.
Archer’s CEO, Adam Goldstein, called the deal “the first of what we expect to be many examples” of monetizing the company's core Midnight platform.
Stock Witnesses Steep Pullback
Despite the monumental deal, Archer’s shares witnessed a steep 5.84% pullback on Monday, closing at $7.42, primarily due to its $650 million stock offering for 81.25 million shares, giving rise to concerns of dilution and cash burn.
The company, which has been named the official air taxi provider for the 2028 Olympics, plans to use the proceeds to fund its acquisition and redevelopment of the Hawthorne Airport in Los Angeles, which will serve as its operational hub for the LA air taxi network.
Shares of the company are up 4.72% overnight, following the announcement of the deal. According to Benzinga’s Edge Stock Rankings, the stock scores high on Momentum, but has an unfavorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.
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