Can I buy this stock at a market cap of $2.5bn like investing in Tesla in 2010?

Tesla The stock has been a huge success since it was listed in 2010, up a whopping 27,443%!

Indeed, shares of the electric vehicle (EV) pioneer are up 35% in just the past month. However, that is not the episode Archer Aviation (NYSE: ACHR ), whose share price rose 91% in November alone.

I mention this mysterious company because, like a young Tesla, it strives to disrupt transportation through electric innovations. However, this late-stage startup is relatively small. Its market cap is just $2.5bn compared to Tesla’s $1.1trn.

Still, it apparently made some investors happy. Could buying Archer shares be like investing in Tesla in 2010? Let’s talk.

What are you doing?

Archer Aviation makes an electric vertical take-off and landing (eVTOL) aircraft called the Midnight for urban travel. In other words, an electric flying taxi is quieter and greener than a helicopter.

It is designed to carry four passengers and a pilot and cruise at speeds of up to 150 mph. The aim is to reduce commuting times and eliminate traffic bottlenecks in the world’s most congested cities.

For example, Archer is planning an air taxi network in Los Angeles that would replace one- to two-hour drives with 10- to 20-minute flights. It can be a ride-hailing service like Uber.

Along with this, Archer sells his aircraft to third parties. It recently signed a buyout agreement targeting $500m Japan Airlinespushing its aircraft order book above $6bn.

The company is backed by the auto giant Stellantishelping to make the Midnight Flight.

A new form of transportation

Last month, the Federal Aviation Administration (FAA) approved eVTOLs and delivered a final set of safety regulations. This is a new category of aircraft regulated by the FAA since helicopters were introduced back in the 1940s.

So, this now seems to be less of a question of if but when these flying taxis pick up passengers.

But how long exactly? This is where the uncertainty comes in. The company is still working on an aircraft certification program. This is on track to be completed by early 2026, but there are still likely to be hurdles.

It is also scheduled to launch air taxi services in the United Arab Emirates in early Q4 2025. So we are at least a year away.

Losing money

Archer is not generating cash and posted a net loss of $115.3m in Q3. It ended the quarter with $500m in cash, and could soon receive another $400m from Stellantis. So it has enough cash for now.

However, it plans to increase production to two planes per month by late 2025. Therefore, it will likely need to raise more capital at some point, which may dilute shareholders.

The next Tesla?

I own shares of rival eVTOL Joby Aviationas I think its collaboration with Uber and the vertically integrated model would give it a competitive advantage over Archer. The job stock is up 47% so far in November.

But both stocks are extremely risky and far from certain to produce Tesla-esque returns. Another eVTOL startup, Germany’s Lilium, recently went bust.

However, Morgan Stanley sees this urban air travel market reaching $1trn by 2040. Archer offers investors the perfect entry point into this potentially revolutionary industry.

That said, I believe owning both stocks is too risky, so I’m sticking with Joby for now.