One of the Best Space Stocks Just Reported a Big Change, and Its Stock Popped 35% in 1 Day

Every so often, you're right about a stock, and it makes you nervous about how long you can keep on being right. That's kind of how I feel looking at Intuitive Machines (NASDAQ: LUNR) stock right now.

Back at the start of the month, if you recall, I said Intuitive Machines stock was a buy and could pop after earnings. And after Intuitive reported earnings this week, the stock did indeed go up. In fact, it went up a lot, surging nearly 35% at one point on the day after earnings, and still up nearly 28% as I type these words.

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And now I'm honestly not sure this stock is still a buy.

Intuitive Machines' first lunar lander, IM-1, descending to the moon. Image source: Intuitive Machines.

Intuitive Machines Q1 "earnings"

Intuitive Machines' Q1 earnings report didn't feature a lot in the way of "earnings," necessarily, and it only reported $62.5 million in revenue. According to the good folks at The Fly, however, that was less than the $66.1 million in revenue that Wall Street analysts were predicting. It was also a 15% decline from the company's $73.2 million in Q1 2024 revenue.

Operating costs of $72.6 million ate up all the company's revenue and left Intuitive with a $10.1 million operating loss for Q1. On the bottom line, losses were $11.4 million, or $0.11 per share, according to data from S&P Global Market Intelligence.

That's the bad news. Now, here's the good: Intuitive Machines just announced a big change in its cash situation.

Intuitive Machines generated positive operating cash flow for the first time in nearly two years in Q1 -- $19.4 million, and reported quarterly positive free cash flow of $13.3 million. The company is still FCF-negative for the past 12 months, and most analysts don't expect to see the company generating FCF consistently for another few years -- but Q1 improved its TTM performance considerably, and Intuitive now has at least a chance of reporting its first full year of positive FCF in 2025.

So you're saying there's a chance?

Yes, a small chance. Most analysts still see Intuitive burning cash this year, but less than $2 million. But Intuitive is due to receive "IM-2 success payments" in Q2, which could potentially push the company over the finish line. Management is forecasting between $250 million and $300 million in total revenue this year, right in line with analyst forecasts.

In other "IM-" news, the company confirmed that its next moon landing, IM-3, is on track to take place in the first half of next year, "and will incorporate IM-2 lessons learned" -- which hopefully means Intuitive has figured out how to keep its landers from toppling over after landing on the moon.

Intuitive is also making progress on its much bigger, much more valuable, $4.8 billion contract to build a Near Space Network for satellite communication between the Earth and moon, completing two "milestones" and receiving funding for two more.

Is there still time to buy Intuitive Machines stock?

With Intuitive Machines stock up so much (again, about 28% over just the past few days), and up so quickly after earnings, I'm a bit less enthusiastic about buying more shares (I already own a few) now that the good news is out.

True, the chance that Intuitive might report positive full-year free cash flow in 2025 -- a full three years earlier than Wall Street was expecting -- could be another great catalyst to lift the stock. That said, the main project I'm counting on to drive the company's success is the $4.8 billion NSN NASA contract. That one stretches over 10 years, and appears to be rolling out only slowly, with only $9 million in revenue booked in Q1, and only $18 million more coming in Q2.

It's a big-dollar contract, with a long timeline. These two factors combined create a risk that a budget-constrained NASA might be forced to cancel the contract at some point in the future, dramatically limiting growth prospects for Intuitive Machines -- and potentially crashing the stock as well. While I don't think that will happen, it's a risk, and it's one investors in Intuitive Machines stock should keep in mind.

The best way to limit that risk is to buy Intuitive Machines stock on a pullback, when it looks cheap again.

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Rich Smith has positions in Intuitive Machines. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.