Archer Aviation Inc. (ACHR) shares plummeted 7.16% in premarket trading on Friday, following a downgrade by J.P. Morgan analyst Bill Peterson. The electric vertical takeoff and landing (eVTOL) aircraft maker's stock reacted negatively to Peterson's decision to cut his rating from Buy to Hold, citing concerns that the shares have risen too far too fast in recent months.

Despite raising his price target for Archer from $6 to $9, Peterson believes the current stock price is trading as if the company's aircraft have already been certified for commercial flights, which is not expected until 2025. He noted that Archer and other eVTOL players like Joby Aviation have seen their stocks surge, potentially driven by expectations that a new administration will be favorable for the industry. However, the analyst cautioned that too much positive sentiment is already reflected in the share prices, warranting an "altitude adjustment" for the sector.

Peterson also downgraded Joby Aviation to Underweight from Neutral, although he raised his price target for Joby as well. The analyst's moves come as the eVTOL industry faces scrutiny over its lofty valuations, with investors seemingly pricing in successful aircraft certifications and commercial launches before they have been achieved.