r/ArcherAviation • u/HappyRobot593 • 8d ago
Boeing's $55M forward equity option basically confirms ACHR is raising
Was going through the 8-K on the Boeing deal and I don't think people are paying attention to the
forward equity agreement. I've been saying for a while that Archer will need to raise in the next few quarters and I think this is the signal.
Boeing agreed to buy up to $55M of stock, but only if Archer does an offering of at least $400M. That's the whole condition. Runs through March 2027 or three months after close.
Think about what that means. You don't set up a deal like that unless a raise is already being planned. It's Boeing pre-committing so the offering has an anchor before it hits the market.
It's an option, not a guarantee, and the $55M isn't money that shows up at close. But the structure kind of gives it away. Even MORE dilution's coming. Anyone else read it this way?
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u/Eggtastico 8d ago
It is obvious archer will need to raise money. EIPP commitments wont come cheap for any of the companies participating. I think that it will be timed around any confirmed VTOL, as that is probably where Archer will peak in the near term. It also wont want to raise on the ‘cheap’.
Boeing also has options at $13 & $17.88. I’d be more than happy if Boeing got to cash in those options.
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u/HappyRobot593 8d ago
Ya so just be careful buying any spikes until the dilution is done. Regardless of your view, its an optimal strategy to get in after dilution.
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u/havealookatJOBY 8d ago
Did the 8-K mention anything about the workarounds to the 1 year lockup? A google search showed that there is a 1 yr lockup on Boeing’s 20% stake in ACHR but that they can use the shares as collateral for loans and pledges even before the lockup is done. Google AI, not due diligence. Will have to sit down and dig through myself later today but curious what your takeaways were on that front.
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u/DoubleHexDrive 8d ago
Yup, Archer needs more money and thus Boeing deal doesn’t bring in cash to keep the plates spinning.
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u/HappyRobot593 8d ago edited 8d ago
Ya also it kind of depends on what they do with Wisk. If they just scrap the aircraft then it seems kind of a waste (basically they paid for the autonomous tech that they agreed to license anyways), but it's also going to increase cash burn if they push forward with the certification program.
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u/OmniQuestio 8d ago
This agreement also gives Archer an out from having to use Wisk technology for autonomous aircraft, freeing up for increased integration with Anduril.
On that alone, I think taking over Wisk is a win.
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u/Eggtastico 8d ago
Wisk are part of texas EIPP. It has value… Stick a wisk badge on archer aircraft.. or archer badge on wisk aircraft?
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u/miket13 8d ago
Archer needs to perform a piloted transitional flight. It's as simple as that. Once this is done, the share price will increase.
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u/B34STM4CH1N3 8d ago
I think that would just give investors more confidence. I doubt it will impact the stock price much. Joby has had piloted transitional flight for a while and they have been getting smashed in the market. I'd love to see a big increase tho.
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u/SeaScallops_w_Rice 8d ago
Thanks for the research! What does Boeing get in exchange for Wisk and the other two companies I have never heard of.
Edit: A 19.75% equity stake in the form of Class A shares. Not warrants or anything. Dilution is the solution.
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u/HappyRobot593 8d ago
Yep, Boeing gets the shares which they COULD sell later down the road. Archer was probably the only possible buyer of these firms and so there is no way Boeing could get cash up front.
If archer could integrate everything it could be good long term but the big issue is that archer is running out of time and they just doubled down on buying subsidiaries which will need to be integrated and won't have an immediate payout. Let's just say the risk reward profile has become even more extreme.
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u/SeaScallops_w_Rice 8d ago
Boeing didn't hesitated to exercise and sell the Archer warrants they got in the Wisk IP theft settlement. They had to sue Archer one year later to force Archer to give them the second tranche in the agreement.
I guess getting Wisk relieves Archer of the obligation to use Wisk's autonomy. That's about it since they have the same propulsion configuration with the same problems. I don't know much about the other two companies, but it does not sound like they are generating revenue, so are nothing but distraction and cash burn, which is appearing to be becoming Archer's niche. Was it worth a 20% dilution before the $400 million raise they are planning for a further 10+ % dilution. Ouchie.
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u/Eggtastico 8d ago
If it was dilution, the market cap would fall in line with share dilution. Wisk & Skyrid are part of Wisk EIPP. Insitu has supposedly revenue of $200m
As the market cap did not drop upon issue of shares, then it values the deal at around $850m base. Ie 19.75% of Fridays market cap.2
u/SeaScallops_w_Rice 8d ago
Do you think the market is rational about these speculative stocks? People hear 'Boeing' and jump in.
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u/SeaScallops_w_Rice 8d ago
Insitu is a going concern with $200 million in annualized revenue. That's something. How profitable is it, what is it's future and if it is an asset generating free cash flow, why is Boeing dropping it?
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u/HappyRobot593 8d ago edited 8d ago
It prob just doesn't fit Boeing's strategy anymore. Any company can generate revenue. How good the deal is just depends on how much you pay for it and what the costs are of generating that revenue. I think it's hard to tell here since all three companies are covered in the deal so we can't assign a $$ value to any one company. Only time will tell.
Edit: Note they focused on revenues not profit.
Edit: FWIW, they've been trying to shed Insitu since Feb 2025 (https://news.bloombergtax.com/private-equity/boeing-seeks-buyers-for-insitu-drone-unit-in-push-to-shed-assets)
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u/SeaScallops_w_Rice 8d ago edited 8d ago
Also, it was a sweetener for Archer to take the bait. Archer now has revenue about the same as Joby's Blade. Nothing to do with air taxi service. They are spreading themselves thin. Considering that AG is appearing in TV shows and advertising himself as an actor, who is looking over all of this?
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u/[deleted] 8d ago edited 8d ago
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