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Intuitive Machines Inc(LUNR-Q)

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Why Intuitive Machines Started Mooning and Then Plummeted Back to Earth This Week

Motley Fool - Fri Feb 24, 2023

What happened

Shares of Intuitive Machines (NASDAQ: LUNR) had a wild week of trading in its public market debut. Despite explosive gains on Wednesday's trading, the company closed out this week down 35% from the previous week's market close, according to S&P Global Market Intelligence.

Intuitive Machines appears to have briefly gained meme stock status, attracting interest from retail and institutional investors looking to make a quick profit on a swing trade. Unfortunately, the company's stratospheric gains proved to be short lived, and the stock ended the week deep in the red.

A view of the Earth from the moon.

Image source: Getty Images.

So what

Intuitive Machines closed its merger with Inflection Point Acquisition on Feb. 13, started trading publicly the next day, and quickly soared out of the gate. The company then saw another huge valuation spike earlier this week, but it couldn't hold on to the gains.

Stocks that have gone public through special purpose acquisition company (SPAC) mergers have seen volatile trading over the last couple of years. It looked like the explosively volatile SPAC trend had calmed down somewhat recently, but Intuitive Machines appears to have briefly revived the phenomenon.

The stock posted gains as high as 260% in Wednesday's intraday trading session, but the force of gravity soon took hold. In addition to the momentum reversal following the explosive gains, Intuitive Machines' stock appears to have gotten caught up in a pullback for the broader market. The broader market struggled on Friday as the most recent personal consumption expenditures price index arrived with higher-than-expected inflation. The index rose 0.6% on a sequential basis and 4.7% year over year, and the greater-than-expected increase suggests that the Federal Reserve may need to continue raising interest rates in order to combat inflation.

Now what

Intuitive Machines remains a highly speculative stock. The company is best approached as a high-risk, high-reward investment because there's very little visibility on what comes next for the company's business.

As a company that's recently gone public through a SPAC merger, Intuitive Machines has not had to disclose some key financial data that could be used to evaluate the company in its current state and attempt to chart its financial trajectory. With its market cap sitting at roughly $426.5 million and the stock seeing highly volatile trading, investors should move forward with the understanding that the stock looks very risky right now.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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