Intuitive Machines – the last space SPAC?

Jump to heading Is Intuitive Machines the last space SPAC?

If the United States' ambitions for fresh Moon exploration get you thrilled, you'll soon be able to place a cash wager on the venture: Intuitive Machines, which NASA contracted to transport supplies to the lunar surface, is going public and will trade on the Nasdaq under the symbol LUNR.

Intuitive is combining with Inflection Point Acquisition Corp., a publicly listed special purpose acquisition company, or SPAC. The transaction is worth $1 billion and will leave the corporation with $350 million in cash on its balance sheet.

Intuitive was created in 2013 by veteran NASA contractor Kam Ghaffarian and former NASA executives Steve Altemus and Tim Crain to supply spacecraft development components and services. When NASA decided to recruit companies to do robotic reconnaissance flights on the Moon ahead of the next generation of humans, Intuitive Machines received contracts to deliver science payloads and create a "hopper-lander" capable of landing in deep craters.

A number of space firms have gone public via SPAC deals in recent years, with varying success. Some companies, including as Virgin Galactic and Momentus, have yet to figure out their business plan or produce consistent income. Others, such as Planet and Rocket Lab, have shown revenue growth and traction as public firms. However, none have climbed over the $10 pro forma share price that SPACs utilize. To be honest, the Fed's tightening of monetary policy and post-pandemic shifts in investment behavior have caused the market's majority of high-tech equities to plummet.

Intuitive's goals for domination in the space economy
Intuitive anticipates $102 million in sales this year and $291 million in 2021. Given the $262 million in NASA contracts on their books, that's not unreasonable. However, the corporation anticipates $759 million in sales in 2024. That's a significant increase, and it will mean adopting many business lines—data services on the Moon, orbital services, and space goods and infrastructure—that make roughly $8 million today and boosting them to $480 million in 2024. Given the inability of previous space SPACs to meet equally rosy estimates, as well as the periodic delays in space operations, that may be unreasonable. And, with the SEC considering regulation changes that will make SPACs less appealing, it may be one of the last space companies to go public in this manner.

As NASA's hoped-for landing date of 2026 approaches, the firm is counting on ongoing public support in Moon-related operations. It plans to provide a communications network, navigation services, and uncrewed surface transportation. However, there is a lot of ambiguity regarding how NASA will get humans to the Moon. The difficulties encountered in launching the first Artemis 1 test mission and with a pathfinding spacecraft dubbed Capstone demonstrate how risky it might be to depend on space exploration progressing in a linear fashion.

Nonetheless, Intuitive Machines is one of a few businesses, along with Astrobotic, Draper, and Firefly Aerospace, who are well positioned to compete for $2.6 billion in contracts to assist NASA with the dirty job of going to the Moon. If you believe the lunar economy may be a goldmine, this is the investment bet for you. Ghaffarian, Intuitive's executive chairman, is also the founder and chairman of Axiom Space, a major space tourism company competing to construct its own space station in Earth orbit. He and his colleagues have definitely found out how to collaborate effectively with NASA—a critical ability.

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(ENDI Corp. and its affiliated Registered Investment Advisors do not own a position in Inflection Point Acquisition Corp. as of September 21, 2022.)