Boeing Ditches Three Businesses to Archer Aviation

Boeing has made significant strides in its turnaround efforts by divesting three of its eVTOL and aerospace technology businesses to Archer Aviation. The deal, announced on August 10, will see Boeing receive a nearly 20% stake in Archer in exchange for Wisk, Insitu, and SkyGrid.

The terms of the agreement also include an equity investment of $55 million from Boeing in Archer, as well as warrants giving Boeing a further shareholding opportunity. Assuming regulatory approval is granted and the deal closes later this year, this will give Boeing significant exposure to the eVTOL market through its new partnership with Archer.

Despite the potential benefits for Boeing's stock, analysts are cautioning investors not to get too excited just yet. With a market cap of $140 billion, this is merely a drop in the bucket compared to the aerospace giant's overall value.

The turnaround efforts at Boeing have largely been priced in, with its stock trading at 77 times trailing-12-month earnings - a massive premium even among other high-flying aerospace stocks. While management may be optimistic about reaching $10 billion in annual free cash flow, this is still below the company's peak of $14 billion achieved in 2018.

As such, investors are advised to wait for a pullback or clearer guidance on future profitability before considering a buy.