Trade Alert – Searching for Water
December 6, 2024 | 3:28 PM by Fahad Khalid | fkhalid@jaguaranalytics.com
Intuitive Machines
Ticker: LUNR
Industry: Space Tech
Current Price: $12.55
Target: $20+
Stop Loss: $8.00
Time Duration: 105 Days
Trade Idea – Buy LUNR straight March 15 call options for $3.00 debit or less.
The bid/ask spread currently is 2.90 x 2.95 and volume in this strike is 447 and open interest is 5,194. Placing the alert 5 cents above the offer.
Trump’s presidency will mark the beginning of space race. That’s what market is telling me. There are several ways to profit from this, all of which are running lately including RKLB, BKSY, RDW, LUNR, ASTS. I already own BKSY common. Now I am also buying LUNR common (for long term in retirement account) as well as March 15 call options for a specific catalyst that is coming up in January. It could really be a very exciting time over next 4 years with space tech. It’s hard to imagine how it will all unfold, but you don’t want to miss the opportunity in stock market in some of these names that will time to time catch fire and run hard. You saw the news two days ago when NASA announced plan to land on the moon in 2027. That’s just the beginning. Below I present to you some extensive background pertaining to LUNR.
Short Term View (Catalyst in January 2025) – Intuitive Machines is developing the Nova-C lunar lander, designed to deliver small payloads to the Moon. Here are some key details: Mission: The Nova-C lander is part of NASA’s Commercial Lunar Payload Services (CLPS) program, aiming to return humans to the Moon and establish a sustainable presence. Launch: The first Nova-C lander, named Odysseus, was launched on February 15, 2024, by a SpaceX Falcon 9 rocket. It reached lunar orbit on February 21 and successfully landed on the Moon on February 22, 2024. Payload Capacity: The Nova-C can carry up to 100 kg (220 lb) of scientific instruments and other payloads. Power: It is powered by methalox propulsion, a combination of liquid methane and liquid oxygen, which is a first for lunar missions.
The second Nova-C lander (IM-2) is scheduled to launch in January 2025, and a third (IM-3) in October 2025. This mission will carry NASA’s Polar Resources Ice Mining Experiment-1 (PRIME-1) to search for water ice at the Moon’s south pole.
Long Term View (Massive 5-Year Contract from NASA) – On September 17th, NASA awarded the Company a Near Space Network (“NSN”) contract for communication and navigation services for missions in the near space region, which extends from Earth’s surface to beyond the Moon. This Subcategory 2.2 Geostationary Orbit to Cislunar Relay Services is a new Firm-Fixed-Price, Multiple Award, Indefinite-Delivery/Indefinite-Quantity (“IDIQ”) Task Order Contract. The contract has a base period of five years with an additional five-year option period, with a maximum potential value of $4.82 billion. The contract goes from October 2024 through September 2029, with the option period potentially extending the contract through September 30, 2034. A key highlight of this contract is the debut of Intuitive Machines’ lunar satellite constellation, a service the Company believes is a strategic element in its vision to commercialize lunar activities. The constellation will provide enhanced data and transmission services and autonomous operations, creating a robust infrastructure in line with Intuitive Machines’ three pillars to commercialize a celestial body. As part of this contract, the Company will deploy lunar relay satellites and provide communication and navigation services that play an essential role in NASA’s Artemis campaign to establish a long-term presence on the Moon.
Valuation Very Compelling – A key reason why I’m buying this stock for long term in retirement account as well is because of valuation. There were many companies that came to market during pandemic with SPAC mergers and they immediately fell off a cliff and stayed in bear market. LUNR is one of them. It wasn’t until very recent big breakout in Russell and excitement about leadership change in Washington with appointment of Jared Isaacman to be the next NASA administrator, these stocks have started to come to light again. LUNR market cap currently is only $1.2 billion after successfully completing share offering which was upsized due to high demand. Following the raise, the company will end 2024 with $250+ million in cash, no debt and potential to bring another $250M of cash via $11.50/share warrants that are legacy of its SPAC merger in February 2023. This is a fortress balance sheet.Meanwhile, the company raised its FY24 sales guidance to $225M, followed by sales to rise to $378M in FY25 (up +67% YoY) which is supported by $316M in already contracted backlog which is only going higher due to large NASA contract that runs through 2029. Stock is trading at less than 4x next year’s sales. Make things even better, in Q3 the company reached almost FCF positive status with EBITDA loss of only $6M and they guided they will get there in early 2025. It is extremely hard to find super strong set of financial statements like this in a cutting edge industry.
Vision for Humanity’s Future in Space – Do yourself a favor. Take some time over the weekend and read this whitepaper published by Lockheed Martin. SeeHERE. Lockheed Martin (LMT) envisions a thriving lunar economy within the next 15 years—a vision that closely aligns with Intuitive’s strategic direction and proven accomplishments. By enabling access to the critical lunar South Pole region coveted for potential ice-deposit resources and seemingly more sustainable environment, LUNR actively is contributing to the development of this nascent lunar ecosystem.
Could this $1 billion company today be worth $10 billion in the future? How about $100 billion?
Fahad
Intuitive Machines (LUNR) – We are currently long March 15 calls that we bought for $3.00 on December 6th, see HERE. This position is currently up +117% and I really don’t feel like selling this position given the catalyst ahead in Jan-Feb period. I am also holding common stock for long term which I certainly will not sell. But to be honest with you all, I think I would look like a moron to not take profits in call options when the market is crashing like this, just so I could book them in 2025 to avoid paying taxes in 2024. Let’s step aside. Hope to see a pull back to $15-16 per share in January to get back into calls again because long term this party in space tech is not over. It’s just getting started. The next 4 years space tech is going to be a leading sector to invest in. Sell to close March 15 calls for $6.10 credit or higher. Giddy up!
Fahad