Could Buying Archer Aviation Today Set You Up for Life?

There are good stocks, and there are great stocks. And then there are life-changing stocks -- those like Amazon and Apple, both of which soared in response to those companies' revolutionary products and services. Yet, such stocks are few and far between. It's also not always clear a company is a game changer until well after the fact.

This complicated dynamic is making it tough for investors to make a decision about Archer Aviation (NYSE: ACHR). There's no denying that its business has the potential to be revolutionary. But are the chances of sustained fiscal success strong enough to make a significant long-term bet on this name?

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What is Archer Aviation?

Archer makes flying taxis. The company's aircraft -- called the Midnight -- can take off and land vertically like a helicopter, ferrying up to four passengers for up to 50 miles from one landing zone to another, including over a crowded city full of congested streets. A car ride that might take an hour can now be completed in a matter of minutes, and at not much greater cost.

These aircraft aren't a noise nuisance, either. The battery-powered Midnight is quiet enough to make it practical for drop-offs and pickups even in densely crowded urban settings.

Several Midnight aircraft already exist and are making non-commercial test flights as part of the Federal Aviation Administration certification process. The company has already been approved to operate as an airline within the United States, and its final certification is forthcoming, too.

Commercial operations are likely to begin later this year, first in Abu Dhabi, the capital of the United Arab Emirates, and with U.S. cities like New York and Los Angeles not far behind. The company is laying the groundwork for air taxi hubs at Los Angeles International Airport along with several busy nearby airports like the ones in Santa Monica, Hollywood Burbank, and Long Beach.

The company is capable of manufacturing a handful of Midnight aircraft right now, but its recently completed factory in Covington, Georgia, could be producing up to 650 aircraft per year by 2030. That would be enough to build enormous fleets in several major cities all over the world, where an alternative mobility solution like this one may be well-received.

Getting a read on the air taxi market's future

It's an interesting idea, but is there actually a meaningfully sized market waiting to embrace this sort of transportation? Market researcher iMARC thinks so. It's calling for annualized growth of 14.5% for the global air taxi business through 2033, agreeing with an outlook from Spherical Insights.

Mordor Intelligence puts the predicted yearly growth figure closer to 23%, pointing to the increasing traffic congestion in metro areas. And the underpinnings of all these bullish arguments make enough sense, particularly in light of Archer's developmental partnerships with the U.S. Air Force and Southwest Airlines.

There are risks and potential pitfalls, though. Chief among them are safety concerns. A recent poll by Honeywell indicates that a majority of regular travelers would at least entertain the idea of riding in an air taxi, but 65% of those polled also suggested the safety of this unproven solution is their top concern. And so, would a single tragic air taxi accident dramatically crimp this interest?

There's also the possibility that Archer Aviation will not only continue losing money but also move deeper into the red as it expands its production capacity faster than actual demand for its aircraft. While the idea has merit, and the technology looks to work as billed, nothing like this has ever been done before. So, marketability and fiscal viability remain in question.

And other unique products and services have appeared in the past only to see them greeted with less enthusiasm than predicted. Remember 3D television sets, GoPro's action cameras, meal kits, and Groupon's daily deal coupons when they were new? It turns out that not enough consumers were interested enough to pay for these products or services despite the early hype.

What to do

So, will an investment in Archer Aviation today set you up for life? All-electric air taxis -- by at least several companies -- have been in serious development for a decade now. While none of these initial efforts turned into anything commercial, it's telling that the idea never went away.

Other players like Archer stepped in to pair this early work with newer, recently improved technologies like higher-capacity lithium batteries and lighter motors. Their continued refinement could eventually make air taxis fully viable as a business, creating a billion-dollar market with very few revenue-ready companies.

This investment prospect isn't comparable to a familiar, well-established technology company, however. For that matter, it's not even in the same vein as fledgling companies like Rocket Lab or electric vehicle producer Nio, both of which operate in established industries using proven tech. These are companies facing varying degrees of potential success.

Rather, Archer Aviation looks like an all-or-nothing trade, meaning it's apt to be a complete wipeout or make you a fortune -- with very little likelihood of anything in between. That's probably more risk than most investors will want to take. Never mind the fact that you would have to sit on that risk for at least several more years before there's even an inkling of how things could pan out.

In other words, look elsewhere for more-promising prospects.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.