Intuitive Machines' Lunar Success- The stock that actually did go to the moon

On Thursday, shares of Intuitive Machines, a commercial space startup, soared 48% after the company's lander, named Odysseus, successfully touched down on the moon. This historic landing marks the first time a U.S.-made lander has made it to the moon's surface in one piece since 1972, and follows a string of failed missions by other private groups in recent years. 

Shares of LUNR were volatile as investors braced for the landing. Shares rallied from $3.78 on February 1 to $13.25 after it was announced Odysseus landed. There was a brief moment of uncertainty when communications failed that saw the stock tumble. It was amazing to see the trading action go on while NASA live streamed the event. Shares have settled around the $11.65 area. This is where we stand heading into today.

The successful landing of the Odysseus lander on the moon is a significant achievement, as it will be conducting various experiments on the moon over the next few days, exploring the possibility of setting up a full-time space station on the lunar surface. This mission highlights the marriage between NASA and the private sector, as America is back on the moon, and a commercial company has launched and led a voyage to the lunar surface for the first time in history. 

Intuitive Machines' Odysseus vehicle, carrying research and commercial devices, descended from lunar orbit to land in the moon's south pole region, marking the first time in history that a commercial company has touched down on the lunar surface. The U.S. last visited the surface of the moon in 1972, during the final mission of the Apollo program. 

NASA has historically handled moon flights in-house, but several years ago, the agency hired U.S. space companies, including Intuitive Machines, to develop uncrewed landers and land them to the surface with cargo in tow. Landing on the moon is difficult, and attempts by Japanese and Russian companies have failed in the past. In January, a moon vehicle developed by Astrobotic Technology didn't attempt a landing due to a fuel leak. 

Intuitive Machines designed Odysseus to ease down to the surface, reducing its velocity by about one mile a second to land at a speed of roughly 3 feet a second. 

NASA is driving efforts to eventually return U.S. astronauts to the lunar surface, overseeing work by U.S. aerospace contractors to develop rockets, space suits, and other vehicles for a series of planned missions. The agency recently delayed a planned human return to the moon to September 2026 at the earliest. 

Intuitive Machines was founded around a decade ago by two of the company's current top executives and investor Kam Ghaffarian. The company aims to develop services and technology for a busy economy centered on the moon. Intuitive Machines merged with a blank-check firm a year ago to raise money and have shares start trading publicly. 

The company generated $49 million in revenue during the first nine months of last year and reported an operating loss of more than $50 million over that time frame. In November, LUNR reported a Q3 2023 revenue of $12.7 million, primarily from three NASA Commercial Lunar Payload Services contracts, marking an increase from the previous year's $10.3 million, alongside a contracted backlog of $135.2 million excluding a significant upcoming $719 million NASA contract. The quarter also saw an operating loss of $23.2 million, deepening from the prior year's $11.8 million loss, but was bolstered by a $20 million equity investment and an ending cash balance of $40.7 million. Furthermore, LUNR is anticipating over $3 billion in award decisions for various space and lunar services, signaling potential future growth.

Since completing its listing, the stock has experienced fluctuations. Shares closed at $3.78 in early January and settled at $8.28 on Thursday. After the landing was confirmed, the company's shares surged about 27% in after-hours trading. 

Analysts at Cantor raised their price target for Intuitive Machines to $13 from $4, while Roth maintained a buy rating and raised their price target to $15 from $4. 

LUNR successfully launched its IM-1 mission and subsequently deployed its lunar lander in space for its trip to the Moon's surface, representing the first U.S. mission to the Moon's surface in over 50 years. 

Intuitive Machines' management is optimistic about the company's future, as it brings NASA science to the Moon's surface, which is expected to facilitate future human exploration missions. These instruments are expected to serve as precursors to NASA's Artemis human missions, targeted to begin in 2025 and culminate with Astronauts landing on the Moon in 2026. 

Recently, Intuitive Machines announced that Erik Sallee, the company's Chief Financial Officer, will be stepping down from his position, effective January 26, 2024, for personal and family reasons. The company has initiated a search process to appoint a new, permanent CFO, with Steven Vontur, the current Principal Accounting Officer, serving as interim CFO. 

Looking ahead, Intuitive Machines is poised for a series of catalysts over the next two quarters, including the January launch of LUNR's IM-1 lander return to the Moon mission, >$3B of commercial space awards where LUNR is in prime position, and the company's revenue generation from the NASA's $719M 5-year OMES III contract, which will begin in December. 

LUNR announced an agreement on January 11 with an accredited investor for the full exercise of an outstanding Series B Common Stock Purchase Warrant, leading to the purchase of 4,705,883 shares of Class A common stock and the issuance of new Series A and Series B Warrants to the investor. The new Series A Warrant is exercisable after stockholder approval and has a five and a half year expiration, while the Series B Warrant is exercisable after stockholder approval with an 18-month expiration, both containing restrictions to prevent ownership exceeding 9.99% of outstanding common stock. The exercise of the existing warrant resulted in gross proceeds of approximately $11.8 million for LUNR, before estimated offering expenses.

This warrant is notable as the current float stands at 15 million. Investors need to be aware that this float will increase by 25% over the next few years. The threat of dilutive action will be held above investors for the foreseeable future.

The short interest in the name stands at 11%, making this a very viable squeeze play. 

Overall, Intuitive Machines' successful moon landing marks a significant milestone in the history of space exploration and investment potential. With a clear strategy, strong leadership, and a series of upcoming catalysts, the company is well-positioned to capitalize on the growing commercial space industry.

$LUNR(LUNR)