Why Intuitive Machines Stock Dropped Today
Key Points
A Blue Origin New Glenn rocket exploded on its launch pad last night.
Intuitive Machines does not use Blue Origin for satellite launches, and is even a Blue Origin competitor on the moon.
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Intuitive Machines (NASDAQ: LUNR) stock tumbled 7.3% through 12:15 p.m. ET this morning -- that's the bad news. The good news is that there's no bad news on the wires today concerning Intuitive, per se, to explain why the stock is going down. Instead, shares of this space stock are reacting to bad news from another space company entirely:
Blue Origin.
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Image source: NASA.
Disaster for Blue Origin could be good or bad for Intuitive Machines
Last night, a Blue Origin New Glenn rocket exploded on its launch pad at Cape Canaveral in Florida while undergoing a routine engine test. Initial reports suggest Blue Origin's LC-36A launch complex has been badly damaged, if not destroyed.
Now, this isn't necessarily bad news for Intuitive Machines. In the lunar lander market, Intuitive is in fact a competitor to Blue Origin, such that bad news for Blue could end up reducing competition for Intuitive!
Intuitive does not use Blue Origin's megarocket to launch either its satellites or its lunar landers. Still, it might need to in the future. Moreover, because Intuitive lacks a rocket of its own, it does use other launch providers, and the loss of capacity from Blue Origin launches could raise launch prices across the industry.
That's just how the law of supply and demand works -- taking New Glenn offline reduces the total launch services "supply." Given constant or growing demand, Intuitive's launch costs could rise.
Things could get worse
My bigger worry, and I suspect what's really worrying investors today, concerns Intuitive's stock price. Up 300% over the past year, Intuitive stock has been priced for a perfection that's very hard for any company to achieve -- as Blue Origin's accident just reminded us.
Carefully gauge your risk tolerance, investor, before investing in risky space stocks -- because space will always be hard.
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Rich Smith has positions in Intuitive Machines. The Motley Fool has positions in and recommends Intuitive Machines. The Motley Fool has a disclosure policy.
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