Despite the conventional “sell-half” rule, which suggests selling half of a position when it doubles to lock in profits and protect against volatility, I am choosing to break this rule with Archer Aviation (NYSE: ACHR). This decision is based on a confluence of factors that suggest Archer’s rally could be just getting started, and the stock has strong potential moving forward. Here’s why I’m holding on:
1. Institutional Backing Builds Credibility
Archer Aviation has secured significant investment from major institutional players, which is uncommon for many early-stage speculative growth stocks. Stellantis N.V., the parent company of well-known brands like Chrysler and Fiat, holds a 20% stake in Archer and is actively involved in the company’s manufacturing efforts. Additionally, major investment firms such as BlackRock, Vanguard, and Millennium Management have also taken large positions in Archer, which adds considerable credibility. The presence of these heavyweights suggests that Archer could attract more institutional capital, potentially driving further price appreciation.
2. Short-Sellers Are Under Pressure
As of October 31, short-sellers held about 20% of Archer’s float, which presents a significant short interest. This overhang could create upward pressure on the stock, especially if Archer continues to show progress toward its goals. Archer’s third-quarter earnings revealed notable advancements, including the completion of its manufacturing facility and progress in its FAA certification process. The company is on track to begin aircraft production in early 2025, with plans for a commercial launch in the UAE in Q4 2025. If these milestones continue to materialize, short-sellers may be forced to cover their positions, fueling further gains.
3. Massive Market Opportunity in eVTOL
Archer is a leading player in the electric vertical takeoff and landing (eVTOL) market, which is projected by Morgan Stanley to exceed $1 trillion by 2040. While the market will be competitive, Archer’s strategic partnerships—especially with Stellantis—position it as a potential frontrunner in the nascent eVTOL industry. This, combined with the growing interest in small-cap stocks, has contributed to Archer’s 93.5% surge over the past 30 days, outpacing broader indices. With significant growth potential in both the eVTOL market and Archer’s own expansion plans, this stock may still have a lot of room to grow.
Conclusion:
Given the institutional support, mounting pressure on short-sellers, and the vast market opportunity, I believe Archer Aviation could see continued growth. While the “sell-half” rule is a common strategy for securing profits, in this case, the strong fundamental developments and long-term potential of Archer outweigh the usual advice.
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