Kilograms of socks from China: Archer accused competitor of illegally disguising imports

Air cab developer Archer Aviation filed a lawsuit against its competitor Joby Aviation, alleging that the latter had cheated regulators, concealed ties to China and imported aerospace products from that country under the guise of socks. Quotes of both companies jumped - investors were more encouraged by the fact that the White House chose them to participate in the program to create air cabs.

Archer Aviation filed a lawsuit against its competitor Joby in a California federal court on March 9, The Wall Street Journal noted. The document claims that Joby's actions undermine national security and contradict the company's positioning as an "American manufacturer," the publication writes. Archer alleges that Joby operated a manufacturing division in China for more than a decade that received technology development grants from the Chinese government. In doing so, the company fraudulently disguised aerospace imports from that division by misclassifying the parts as thousands of kilograms of socks, napkins, hair clips and other goods, the lawsuit says.

Joby "doesn't respond to nonsense," an attorney for the company told the WSJ.

On the background of this news quotations of both companies jumped up. Shares of Archer rose on March 9 by 4.2% and continued to grow in the morning trading on March 10. Joby shares added 5.1% on Monday. At Tuesday's premarket, they are up another nearly 5%.

Investors have reacted to reports from both companies that they will begin flying as early as 2026, as the White House has selected them to be part of an aerial cab program, the WSJ says. As a result, Joby will be able to begin operations in ten U.S. states, Archer in three. This is an important milestone for the U.S. air cab industry, which will accelerate the introduction of this type of vehicle into the U.S. market, the release suggests.

Archer and Joby are developing electric vertical takeoff and landing (eVTOL) aircraft and are considered favorites in this nascent market. JPMorgan estimates that it could reach $1 trillion by 2040.

This is not the first legal dispute between the companies. In November, Joby filed a lawsuit against Archer alleging that the latter engaged in corporate espionage, WSJ recalls. Joby believes a competitor hired its former employee who downloaded confidential information before being fired. According to the plaintiff, Archer induced the employee to violate confidentiality agreements and used that information to undermine Joby's business partnerships, the WSJ outlines. Archer has denied those allegations.

Six Wall Street analysts advise to buy Archer shares, two have taken a neutral stance with a "hold" rating. The average target price is $11.88, which means the stock has a potential upside of almost 83% to its closing price on March 9.

Wall Street's views on Joby's prospects are more divided: its securities have four "hold" ratings, three "buy" ratings and the same number of "sell" ratings. The average target is $12.8, up 28% from the last close.