Shares of Archer Aviation Inc. (ACHR) plummeted 5.06% in after-hours trading on Monday, reversing gains seen earlier in the day. The electric air taxi maker's stock had surged nearly 18% during regular trading hours, fueled by speculation about a potential connection to Tesla's highly anticipated announcement scheduled for Tuesday.

The speculation stemmed from a cryptic video posted by Tesla's social media account, showing its logo on a spinning propeller-like object. This led to widespread rumors on social media that Tesla could be entering the electric vertical takeoff and landing (eVTOL) market or forming a partnership with Archer Aviation. The buzz was further intensified by Archer's recent promotional video featuring its Midnight air taxi alongside a Tesla vehicle and its Optimus robot.

However, as the initial excitement waned, investors appeared to reassess the likelihood of such a partnership. Many Wall Street analysts anticipate that Tesla's announcement will actually be about the launch of a more affordable electric vehicle model, rather than a foray into the eVTOL market. This recalibration of expectations likely contributed to the after-hours sell-off in Archer Aviation's stock.

The volatile price action underscores the speculative nature of investments in emerging technologies like eVTOL aircraft. Archer Aviation, which has yet to generate significant sales and is still awaiting regulatory approvals to launch commercial service, has seen its stock trade in a wide range over the past year. Investors are advised to approach such stocks with caution, as they tend to be subject to rapid price swings based on product updates and market speculation.