Why Intuitive Machines Stock Crashed Today
Key Points
Intuitive Machines closed its purchase of Lanteris last month, using up most of its cash to do it.
To replenish its funds, Intuitive will sell $175 million worth of new stock -- about 11.6 million shares.
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Moon explorer Intuitive Machines (NASDAQ: LUNR) stock tumbled 16% through 9:45 a.m. ET Wednesday after revealing how it plans to develop its business after paying $800 million to buy Advent's Lanteris satellite-building business.
Intuitive will sell $175 million in stock and use the proceeds to bolster its bank account.
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Intuitive Machines buys Lanteris
You remember this deal. Intuitive Machines has a $4.8 billion contract to build a satellite communications network between the Earth and moon for NASA. To help build the satellites it needs to run the network, and earn all the money it's been promised, Intuitive bought Lanteris, which specializes in building satellites.
This acquisition closed in January. Intuitive paid $450 million in cash and $350 million in stock for Lanteris. The cash payment, however, took a bite out of Intuitive's $622 million bank account. (We'll find out exactly how much when Intuitive reports earnings March 19.)
To ensure it has all the money it needs to continue building out its "Near Space Network," Intuitive will raise a bit more cash through a stock sale.
What this means for Intuitive Machines shareholders
In sec filings, Intuitive clarifies it will sell $175 million in stock to certain unidentified "global institutional investors." The shares are priced at $15.12. Closing is Friday, Feb. 27, instantly adding 11.6 million shares to Intuitive's shares outstanding.
Combined with the shares issued to Advent as compensation for Lanteris (assuming they were valued at Intuitive's Jan. 13 price of $17.57, this would be 19.9 million shares), we're looking at a total of about 31.5 million shares added to Intuitive's total share count. That's roughly 26.5% share dilution by my count.
If all Intuitive stock goes down today is 16%, shareholders will be getting off easy.
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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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