Stock Market

In 2023, Archer Aviation (NYSE:ACHR) stock surged over 250%, drawing the attention of short sellers, with 24.58 million shares shorted as of Aug. 15, up from 14.1% on July 31. 

With ACHR stock’s average daily trading volume, it would take 3.2 days to cover the short positions, considered moderately high. Thus, this is a company that’s clearly being honed in on as a potential short squeeze candidate in this current environment. 

That said, there are other potential catalysts for this electric vertical take off and landing company. Here’s what I think investors should keep an eye on for the coming weeks when it comes to Archer Aviation.

Cathie Woods Is So Bullish for ACHR

Ark Invest, led by Cathie Wood, displayed strong confidence in Archer Aviation by investing nearly $3.9 million in the company. This purchase encompassed around 604,000 shares and was executed via various Ark ETFs.

Indeed, where Cathie Wood trades is where many aggressive growth investors gravitate toward. Cathie Wood is known for investing in downtrodden tech stocks, but Archer Aviation doesn’t fit that profile. ACHR stock has surged 105% in the last two quarters and is currently up 10%.

Cathie Wood’s bullish stance on Archer signals the company’s potential in the booming eVTOL market, set to grow significantly by 2030. ACHR stock remains attractively priced, leaving room for further investment if its growth persists.

Cost to Borrow Fee Doubled for ACHR Stock

Archer’s CTB fee, the annual cost for short sellers to borrow shares, has risen significantly to 9.96% from 4.94% on August 18. Although it peaked at 12.37% earlier this week, it remains above average but not exceptionally high, typically ranging from 0.3% to 3%. A higher CTB fee indicates greater short seller demand.

Archer’s elevated CTB fee and substantial short interest suggest strong short seller demand. Interestingly, a high CTB fee can inadvertently drive the stock higher as short sellers may rush to buy to avoid fees.

However, this hasn’t occurred yet. Recently, Archer obtained an FAA Special Airworthiness Certificate for its Midnight production aircraft, enabling test flight operations.

Wait for September 12

Mark your calendars for Sept. 12, as Archer Aviation unveils its Midnight eVTOL aircraft at the Global Aerospace Summit in Washington, D.C. It’s the Midnight’s debut to the public.

Archer Aviation’s CEO, Adam Goldstein, and Chief Safety Officer, Billy Nolen, will lead the presentation at the U.S. Chamber of Commerce event at the Ronald Reagan Building and International Trade Center. Goldstein expressed excitement about the event’s theme, highlighting the future of urban air mobility with industry collaboration.

Keep an eye on ACHR stock during the event; it’s likely to act as a catalyst, potentially sparking a rally.

What Now

ACHR stock’s future is speculative, but the urban air mobility market shows promise with projected substantial growth. Cathie Wood’s increased investment indicates growing confidence, fueling speculative interest. There’s also growing demand from speculators and other retail investors around this stock, which could lead to volatility.

My view is that ACHR stock is intriguing as a trade, but may be a difficult stock to digest as a long-term holding at these levels. I’m waiting for the dust to settle before making up my mind just yet.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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