Why Intuitive Machines Stock Crashed Today
Key Points
Intuitive Machines will sell probably 15 million new shares to raise $500 million in new cash.
This is the second big capital raise at the space stock already this year.
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For the second time in less than six months, Intuitive Machines (NASDAQ: LUNR) is raising cash -- and boy, oh boy, are investors mad! Shares of the space stock plummeted 12.8% through noon ET Wednesday.
And why?
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Just a few months ago, if you recall, Intuitive Machines sold $175 million in new stock to help pay for its purchase of satellite-builder Lanteris (which Intuitive will use to build its constellation of Earth-to-moon communications satellites under contract with NASA). Investors promptly sold off Intuitive stock on that news.
Today, they're selling again after Intuitive informed the SEC it plans to sell "up to $500 million" in new stock.
Image source: Getty Images.
"Past performance is no guarantee..."
If there's good news here, it's that the LUNR sell-off today is a bit smaller than the one four months ago -- despite much more money being raised.
Part of the reason investors are being somewhat more forgiving this time around is that Intuitive stock has performed remarkably since its last capital raise. Priced close to $15 in February, Intuitive shares have since shot up past $30 on SpaceX IPO fever.
As a result, Intuitive can now raise nearly three times as much money ($500 million) by selling only a few more shares (14.7 million) than it sold four months ago (when nearly 12 million $15 shares sold yielded just $175 million).
What this means for Intuitive Machines shareholders
That said, today's announced sale is still going to dilute Intuitive Machines shareholders quite a bit. Adding 14.7 million shares to the 160.5 million already outstanding will result in 9.1% dilution. That's assuming Intuitive raises the full $500 million. For now, the plan is to raise "up to" that amount through sales "from time to time."
No need to panic just yet.
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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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