Archer Aviation (ACHR -12.05%) stock saw strong bullish momentum across 2024's trading. The company's share price closed out last year's trading up 58.8%, according to data from S&P Global Market Intelligence.

ACHR data by YCharts

Archer Aviation stock gained ground across last year's trading thanks to business updates and bullish coverage from analysts. The company's share price also got a boost from political developments.

Archer Aviation surged on multiple tailwinds in 2024

While Archer Aviation isn't generating revenue, the company did conduct test flights and issue business updates that helped support bullish momentum for the stock last year. The company appears to be moving closer to getting regulatory approvals and beginning commercial sales and operations for its Midnight flying vehicles this year.

CEO Adam Goldstein said that he expects commercial flights to begin in 2025 -- which implies that he expects regulatory approval in at least one of the key geographic territories the company has targeted for launch. Archer's Georgia production plant is scheduled to begin producing Midnight craft at the beginning of this year and then scale its production output as the year progresses.

Adding another bullish catalyst, the company announced in December that it was partnering with Anduril to produce hybrid propulsion vertical take-off and landing (VTOL) aircraft to win defense contracts from the U.S. government. The potential significance of the team-up was amplified by a subsequent report suggesting that Anduril is partnering with Palantir to create a consortium of next-gen technology companies capable of disrupting the defense space and outcompeting traditional industry stalwarts.

Archer Aviation stock also got a boost from President-elect Trump's election win in November. The incoming Trump administration is broadly expected to create a more lax regulatory climate, which could help Archer receive approval from the Federal Aviation Administration and begin commercial operations domestically.

In conjunction with these bullish developments, Archer Aviation saw a surge of bullish coverage at the end of last year. For example, Deutsche Bank raised its one-year price target on the stock from $11 per share to $15 per share in a note published on Dec. 13. As of this writing, that price target implies potential upside of 63%.

Why Archer Aviation stock is sinking in 2025

On the heels of big gains last year, Archer Aviation stock is seeing a significant pullback early in 2025's trading. In addition to some bearish macroeconomic indicators, the company's share price has also pulled back due to analyst coverage. As of this writing, the company's share price is down 5.4% year to date.

Archer actually posted some gains to start 2025, but the stock is seeing big sell-offs in today's trading following new coverage from J.P. Morgan. While the firm's analysts increased their one-year price target from $6 per share to $9 per share, the target hike reflects gains already made by the stock -- and they downgraded their rating on the stock from overweight to neutral. J.P. Morgan's new price target suggests downside of roughly 3.5% as of this writing.

While J.P. Morgan's analysts don't think anything has fundamentally changed about Archer Aviation's growth story, it still sees significant risks for the stock. The firm's team thinks that investors may be treating type certification for Midnight craft as a foregone conclusion, while there's still significant risk that regulatory approval won't be granted. So even though the stock has explosive long-term potential, investors should understand that it's a high-risk play. Archer Aviation just downgraded at JPMorgan, here's why ACHR-The Fly