If you’ve ever sat in bumper-to-bumper city traffic, then surely you’ve had the thought: If only my car could fly. Archer Aviation (ACHR -2.55%) thinks it can make that wish more than science fiction.

Instead of flying cars, however, Archer is making air taxis — eVTOLs, or electric vertical take-off and landing aircraft. These electric-powered vessels hold four passengers, fly at speeds up to 150 miles per hour, and are designed to land with less noise and downwash than a helicopter. Their presence above traffic may not solve urban congestion, but for passengers who can’t wait 45 minutes in a car, a ticket in one could make this $5.7 billion company a staple in transportation.

Emphasis there on could. Archer is pre-revenue and doesn’t have the regulatory approval to fly commercial passengers. Although investors have been enthusiastic about the company’s progress thus far, shares have fallen about 35% from the 52-week high.

That begs the question: Should you buy now while shares have dropped, or wait for more concrete actions?

Why the stock could take off

Anyone who has sat in city traffic knows firsthand the opportunity that Archer has before it. Roads can only be widened so much, and accidents during rush hour can make already congested highways a grueling hour in your car. This isn’t just a headache for commuters. It’s also a problem for ambulances and other medical responders, for whom the difference between life and death is often a matter of seconds.

To be sure, Archer’s core opportunity is short-hop routes (like 15- to 50-mile trips) at a high price point. Example: A route from Manhattan to nearby airports. On the ground, this could take a couple of hours. But in an eVTOL, like Archer’s Midnight, one could theoretically fly from Manhattan vertiports to Newark Liberty Airport in 10 to 15 minutes.

The total addressable market for Archer could be big. Although it’s hard to value a market that doesn’t exist yet, analysts at Morgan Stanley estimate that the urban air mobility market will be worth about $9 trillion by 2050. Archer’s valuation is currently about $5.7 billion. Even capturing a fraction of that market could mean decades of double-digit growth — though, to be sure, the gap between Archer’s current reality and its TAM is cavernous.

Archer may not be generating revenue, but it’s backed by some blue-chip giants, including United Airlines (NASDAQ: UAL) and Stellantis (NYSE: STLA). It has also aligned with Japan Airlines, Ethiopian Airlines, and Abu Dhabi Aviation, with plans to move air taxi rides into a commercial phase in the United Arab Emirates in 2026.

What could keep Archer grounded?

As good as air taxis sound, the eVTOL industry is still largely unproven. Part of the reason for that is the Federal Aviation Administration (FAA). The FAA, whose certifications allow aviation companies like Archer to fly paying customers, has a complex process for approving aircraft, and no eVTOL company in the U.S. has gotten through all the hurdles to put paying passengers into the air yet.

That doesn’t mean it won’t happen. In fact, Archer and other eVTOL companies could be close to gaining the FAA’s approval soon. Until it does, however, watch Archer’s balance sheet closely. Time means money, and right now Archer isn’t making any. Its cash position is extra fragile as it continues testing and building Midnight craft. Luckily, it sits on about $1.7 billion in cash and short-term investments. That gives it more than a couple of years to continue operating at its current cash burn rate.

ACHR data by YCharts.

Another thing to watch is the progress of Archer’s rival, Joby Aviation (JOBY -0.67%). Like Archer, Joby is backed by blue-chip companies, like Toyota and Delta , and is also stuck waiting for the FAA to approve its eVTOL designs. The risk for Archer, however, is if Joby gets approval. That would give it a first-mover advantage in key markets, placing Archer in “catch up” mode even before it has a chance to build out vertiports.

Speaking of which, that brings me to the last big hurdle: the build-out. Archer, Joby, and other eVTOL companies are designing aircraft for an infrastructure that doesn’t exist yet. To turn the sky into a highway free of traffic, it needs not only aircraft but vertiports and charging stations, all of which will take capital and years of coordination before paying customers can board.

Does that mean Archer isn’t a buy at its current price? Not exactly. You just have to know what you’re buying. This is a pre-revenue company waiting on FAA-type certification to fly its aircraft. If you can live with a multi-year timeline and can stomach turbulence in the near term, a small holding could set you up down the road. If you need predictability, look elsewhere.

Shares of Archer Aviation (ACHR 11.04%) rekindled their choppy recovery rally today, up 11.7% as of 2:33 p.m. ET. While the reason for the big move doesn’t directly translate into real revenue or profit progress, it certainly makes both much more likely than was first anticipated.

An executive order further clears a trail

Credit President Donald Trump, mostly. With an executive order signed late Friday, the U.S. president has hastened the advent of the United States’ electric air taxi industry that will provide personal mobility from one specific inner-city location to another. The order explicitly requests that the Secretary of Transportation begin laying the groundwork for the development of an official eVTOL (electric vertical takeoff and landing) pilot program that includes the participation of at least one “private sector partner with demonstrated experience in eVTOL aircraft development, manufacturing, and operations.”

Archer Aviation qualifies. Its so-called Midnight aircraft capable of flying like an airplane but taking off and landing like a helicopter is not only fully electrically powered, but has already made several hundred successful test flights. Moreover, the company itself is already laying the groundwork for commercial operations in New York and Los Angeles. Transportation Secretary Sean Duffy could readily meet President Trump’s accelerated timeline goals using Archer’s work to date.

Bolstering the tailwind already blowing

There’s no assurance that Archer Aviation will be one of the private sector outfits brought into this regulatory fold, of course. There are others that qualify, like Joby Aviation.

There’s also no reason to suspect that only one private operator will become involved in this official test initiative though. And, given that Archer is developing a version of its Midnight aircraft specifically for the U.S. Air Force, its technology also already arguably has the U.S. government’s unofficial approval. And, whether or not Archer is selected for involvement with the Secretary of Transportation’s new mandate, there’s more than ample opportunity for more than one air taxi service provider in the U.S. alone, not to mention overseas. Industry research outfit Global Market Insights believes the world’s air taxi market is poised to grow at an average annualized pace of more than 20% per year through 2032, led by North America.

More important to interested investors, Trump’s executive order creates more room and reason for Archer Aviation stock to continue rallying from here. Although the start-up is still years away from profitable operations — and as such still poses tremendous risk to its shareholders — the potential upside is commensurate with this risk.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.