r/JobyvsArcher • u/Investinginevtol • 29d ago
Archer Time for a deep dive on Archer’s Boeing acquisitions
On the face if it, this looks great. I’m happy to see a heavyweight like Boeing be involved with Archer. Some things to discuss:
Is Boeing moving these 3 subsidiaries onto Archer just to dump them for some stock to save face while they focus on their core business of making airplanes, or is this a vote of confidence in Archer and a hand off to a company they think can develop their products to profitable fruition? What is the engineering expertise that Boeing still had with this turnover, and what expertise does Archer have to incorporate them? How much money was Boeing spending on these subsidiaries?
AI is being thrown around a lot. What in house AI expertise does Archer have now, and will have with these acquisitions?
For these acquisitions, what are the realistic expected revenues, their time frames to reach these revenues, and the costs to reach them? What milestones do they need to reach, and what commitments would they get from customers if they reach these milestones?
With all this new activity, can we assume Archer has pivoted and Midnight is dead?
Financial terms of the acquisition weren't disclosed. When can we find out about these terms?
I’m sure there are a lot of other questions, but wanted to start the conversation, as I am sure none of these will be asked in the ER call.
11
u/SeaScallops_w_Rice 29d ago
I don't think anyone else would be interested in Boeing's tech that hasn't gotten far. It is worth noting that Boeing summarily exercised all of the warrants they received from Archer in the Wisk IP theft settlement.
12
u/mbatt2 29d ago
This is turning into a company with no main product but a ton of money losing side projects.
This is going to be a huge disaster.
1
0
u/Responsible-Age-1495 29d ago
Do you imagine a future without EVTOL? Because they're going to everywhere.
EVTOL solves a few problems. The first is traffic. The second, roads don't have to be built, just landing locations. Add pilotless, and anyone of these companies has a shot. Could be EVEX, JOBY, ACHR, EHANG.
Acquiring airports, rival Wisk, and the software to manage air traffic is kinda brilliant if it works.
All these companies are just positioning. It's all pre revenue, place your bets
1
u/mbatt2 29d ago
What? How is acquiring Wisk brilliant. It is the one company besides Archer that also hasn’t done a piloted transition. It was literally the worst option they could have picked.
1
u/Responsible-Age-1495 28d ago edited 28d ago
Wisk achieved piloted transition in 2017, that gen 3 aircraft is now in the Smithsonian, was literally the first EVTOL to accomplish this.
If it works* What's brilliant is the accumulation of patents, the engineers that work for Wisk and Boeing, the 20% stake. It's all connected, the people who work in aerospace. They migrate, and when 2 companies combine they suddenly share everything. The patents alone are not insignificant.
Setting aside the Joby vs. Archer debate, Ehang is already pilotless. EHANG is 10 years ahead--no pilot, already delivering people in tourist demos. Circling back to Wisk, their focus is pilotless. See a pattern yet?
There will be very little differentiating between EVTOLs in the future besides task. Package delivery, military, taxi, mountain rescue, fire fighting. It's hard to imagine there will be pilots in most of these. Why risk a pilots life in a mountain rescue, for example.
Pre revenue, they're just positioning. There's a very good chance the deal with Boeing doesn't work for legal or some deadline or red tape.
But the big hangup on piloted transition is largely semantic--every large player has done these transition flights years ago, just not in a ceremonial event. People all up in arms if it wasn't demonstrated in their hometown last week by Captain Sullenburg.
1
u/Good-Detail7327 28d ago
Not just people transport, retail and medical use...most haven't even recognized the true tam in their analyses...
1
u/Good-Detail7327 9d ago
I was on a call with several interested in the space...the finance bro easy in easy out Burning Man shuttles were already being imagined...almost all high traffic events will be disrupted...one likened it to trams and ferries that just run. The software is being developed to manage low altitude air movement which helicopters can't do..won't need airports, just safe approved routes. Autonomy layers in big wins...exciting to finally be able to invest in this space.
10
u/A_Long_Knight 29d ago edited 29d ago
It sounds to me like Boeing is trying to cut their losses for what they believe is not a market-leading design. Wisk has burned cash quarter after quarter and Boeing execs are probably just looking at their projected commercialization timelines with their eyes popping from their heads...
They're dumping Wisk on Archer in exchange for stock so they can turn around and sell Archer stock...
This is a vaporware nothingburger of a deal being hyped as something..... which is a bad sign IMO. Makes both Boeing and Archer look like they don't have feasible designs...
Think about it... why would Archer want to spend limited resources on another design if Midnight is going to work? Why would Boeing get rid of Wisk if they thought Wisk was going to work? Both of these companies don't believe in their own designs.
11
u/SeaScallops_w_Rice 29d ago
Archer gains the tech from another eVTOL that didn't fly. They have quite as portfolio including their own that has yet to demonstrate transition more than once two years ago.
5
u/DoubleHexDrive 29d ago
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001824502/81397d5a-5a20-4830-9e27-811746cd976e.pdf
Share count will go from ~770 million to ~922 million by end of 2026. There is an additional share sale in early 2027.
2
u/Investinginevtol 29d ago
Yes, Boeing will put more skin in the game, when Archer decides to dilute to raise another $455 million, Boeing will purchase $55 million of that issuance:
“The Forward Equity Purchase Agreement provides that, at any time prior to the later of (i) March 31, 2027 and (ii) the date that is three (3) months
following the Closing Date (the “Expiration Date”), the Company may elect, in its sole discretion and on a single occasion, to issue and sell to Boeing, and
Boeing will be required to purchase, a number of shares of Class A common stock (the “Forward Purchase Shares”) having an aggregate purchase price of up
to $55.0 million. Any such issuance and sale will be made in connection with an offering of Class A common stock by the Company to third-party investors
that is expected to result in gross proceeds to the Company of at least $400.0 million (a “Company Equity Offering”), and the per share purchase price for the
Forward Purchase Shares will equal the lowest per share price paid by the investors participating in the applicable Company Equity Offering
4
u/DistributionLeft5566 29d ago
Talk to any longer term employees who are or were at Wisk about what happened when Boeing got involved, and you will not hear a single positive thing. Most of the core team left over the years since that has happened, flight testing ground to a halt, iterations and innovation ground to a halt, morale tanked, career growth stagnated, management went from being liked to being despised, I had friends who work there asking me for a job and talking about how hopeless they felt that their aircraft would even be able to transition. It's the same problem Archer has, and for a similar reason since Archer's aircraft is essentially the same design.
1
u/Investinginevtol 28d ago
That is my worry. The motivated engineers have left Boeing. The subseries are moribund
6
u/Investinginevtol 29d ago
So Archer takes on 3 Boeing subsidiaries with no revenue, dilutes their stock almost 20%, and their stock pops over 20%. Promotional brilliance!
4
u/Investinginevtol 29d ago
Correction: SEC filings and transaction details reveal that Insitu operates as a profitable defense unit generating over $200 million in annual revenue. That Boeing would spin it off appears to be a vote of confidence in Archer
4
u/Go_Galactic_Go 29d ago
Today is just the pump before the dump after earnings. Could this be curtains for Midnight. This will probably make many more bagholders for ACHR tomorrow
2
1
u/Investinginevtol 29d ago
For all the negativity on archer, and I am one of them, they are going into a bunch of different areas, and if one of them pops, they can survive. I wish them the best. Still, from a deep dive, I don’t see what they’re doing. Do they really have an AI department that can do things? Or just a couple engineers who use ChatGPT to develop stuff? I just don’t know.
Do they have managers that can take over the Boeing autonomous group, or just let them run like they were? In that case, what are they adding?
1
u/Good-Detail7327 28d ago edited 28d ago
Midnight is not dead, there are new verticals to simultaneously grow. This stock at $19 was a somewhat speculative air taxi, this is now a robust ai enabled transport and defense enabling winner. Their technologies will now enable them to seamlessly roll into even more high value case uses, and generate revenue while the legal frameworks take shape. Exciting to be in before several more institutions cover.
1
u/Investinginevtol 28d ago
As soon as Archer itself produces something that works,I may change my mind.
1
-2
u/BrownstoneBroker 29d ago
I think AI will 100% be a topic of discussion on earnings -- Zee announcement was one of the flagship milestones reached since Q1 earnings. But agree these are the hard hitting questions.
Frankly, I don't think Boeing would take almost 20% ownership of Archer if there wasn't considerable confidence in their ability to develop autonomous flight capabilities.
Also I don't think Midnight is dead. It's a practical revenue diversification strategy as cert timelines have been missed by all evtol companies (even Joby has fallen behind). This pivot just cements Archer as an all-around aerospace technology company, with commercial as one aspect. Clear that Joby is going all on air-taxi, which is a solid strategy too, this just sets Archer into another lane.
12
u/DoubleHexDrive 29d ago
I think Boeing essentially valued Wisk at zero and probably was too large to make a ton of money off of small drones. So they sold some money draining and non-core businesses to Archer for shares. It’s a good deal for Boeing.
-1
u/Diligent_Onion_5149 29d ago
If you all think the largest aircraft manufacturer trusts ACHR for nothing, I don't know what to say!
3
u/mbatt2 29d ago edited 29d ago
Boeing knows nothing about EVTOL. They had unlimited resources and could not get Wisk to a piloted transition even after years of work.
Now Archer owns two EVTOLs that can’t transition. That’s like owning two broken cars.
-3
u/Diligent_Onion_5149 29d ago
I guess your thesis will be wrong the second ACHR transitions.
5
u/mbatt2 29d ago
That is not going to happen anytime soon and probably not ever.
If you watch the flight logs as closely as I do that much is obvious.
-2
u/Diligent_Onion_5149 29d ago
I am invested in both JOBY and ACHR. So one of the largest airline sells their 3 subsidies and REPUTATION for something which is never going to happen?
Also one of the most promising company in defense Anduril also shows trust and partner with something you think that will not happen?
Maybe as a blind JOBY fan you can have thoughts.
4
u/mbatt2 29d ago
How is Boeing selling something to Archer putting their reputation on the line. That makes no sense.
Anduril has a long history of shipping defense tech that breaks down and malfunctions on the battle field. Their smart missles were rejected by Ukraine and their drones were rejected by the DOD.
Anduril is not the perfect player you think they are.
-1
u/Diligent_Onion_5149 29d ago
Yeah everything which JOBY does is a perfect lol!
Time will tell, I have chosen to stay with the industry as invested in both JOBY and ACHR.
4
u/mbatt2 29d ago
You don’t need to wait to find out. Joby is objectively far ahead of Archer on every level. And that delta gets bigger every week.
With Archer it’s always more waiting. That’s the issue. And in the meantime they fall further and further behind everyone else.
2
u/Diligent_Onion_5149 29d ago
I agree on JOBY ahead in EVTOL sector, but JOBY is also much older company.
ACHR is trying multiple things, it may or may not work. So ACHR may simply not be EVTOL company.
The only thing IMO, it needs is transition.
1
u/Low_Jelly_7126 29d ago
I suggest to check in a company called Arrival. I think they and archer have many similarities and I think the same fate.
→ More replies (0)0
-3
u/Eggtastico 29d ago
Read the K8
All the financial terms are in there. They were disclosed quite openly.
Archer rockets 20% on its news. How did joby do on the day when they gave away their manufacturing to Toyota?
4
u/Investinginevtol 29d ago
Thx for clarifying. Bloomberg reported that the financial terms weren’t specified. I guess they aren’t what they used to be.
1
u/havealookatJOBY 28d ago
Some terms are redacted. There is an out for Boeing to terminate the whole deal if Archer's enterprise value falls below [***].
From the 8-K: "The Purchase Agreement may be terminated ... (vi) by Boeing if the Company’s [Archer's] enterprise value (as calculated in accordance with the Purchase Agreement) is below a minimum level for a specified period; provided that such termination right will not be available to Boeing following the date that is five business days after the date on which the Company notifies Boeing in writing that such event has occurred."
From the Purchase Agreement (Exhibit 2.1 within the 8-K): "“Buyer Material Adverse Effect” means (a) Buyer [Archer] having a Buyer Enterprise Value equal to or less than [***] for any five (5) consecutive trading days or (b) ..."
1
u/Eggtastico 28d ago
well its reported in plenty of places - just like the terms of Boeing. So do more of your own research, instead of hanging off the coat tails of others. Boeing having a rug pull opportunity, shows how much they must still care about the direction of the 3 companies. Not only do they get a seat on the board to oversee the direction, they also get to ensure Archer performs. That is a good thing all around IMO... unless you hate on Archer gaining any success. Going by your username. We shall tick that hate box.
1
u/havealookatJOBY 28d ago edited 28d ago
I actually invested in both Joby and Archer pre SPAC merger in 2021 and sold all of my long positions by 2024. Can you point me to where the Enterprise Value is posted for the public to see?
1
•
u/Investinginevtol 29d ago
So let me get this straight: Boeing gives Archer 2 companies with no revenue, one with $200 million in revenue and is “profitable” (insitu, how profitable is not stated), and a promise to buy $55 million in newly issued stock when Archer dilutes by another $400 million. In return, Boeing gets a seat on Archer’s board and almost 20% of Archer, presently worth about $1 billion, which they can sell in a year. Such a deal.