Intuitive Machines (LUNR) Stock Is Sinking. The SpaceX IPO Is Only Partly to Blame.

Intuitive Machines (LUNR) tumbled on Wednesday after the company announced plans of selling up to $500 million in new shares through an at-the-market equity offering.

This marks the second significant capital raise in less than six months, following a $175 million private placement in February to fund the acquisition of satellite-builder Lanteris.

Including today’s decline, Intuitive Machines stock is now down more than 25% versus its recent high.

Factors Driving Intuitive Machines Stock Lower on June 3

Intuitive Machines cratered on June 3 as investors confronted the prospect of about 9.1% dilution, with as many as 14.7 million new shares being added to the existing 160.5 million outstanding.

The dilution concern, however, was only one factor that drove the stock lower on Wednesday. 

The broader space sector has been experiencing a sharp pullback after an extended rally fueled by enthusiasm surrounding SpaceX’s imminent IPO, which is targeting a $1.75 trillion valuation.

Experts have warned that investors may rotate capital away from publicly traded space stocks and directly into SpaceX once it becomes available, creating a gravitational pull that could trim demand for the likes of LUNR shares.  

Fundamentals Warrant Buying LUNR Shares

The fundamental story at Intuitive Machines remains intact despite recent pressure. 

In Q1, the company generated about $187 million in revenue — nearly tripling on a year-over-year basis — and reaffirmed its full-year guidance for at least $900 million in revenue. 

LUNR’s contract backlog stands at a whopping $1.1 billion, with active engagements with NASA, national security agencies, and the U.S. Space Force's Andromeda program.

The Lanteris acquisition and purchase of Goonhilly Earth Station have expanded its capabilities in lunar communications and ground station infrastructure, positioning it as a truly diversified lunar infrastructure prime.

Why Caution Is Still Recommended

On the flip side, valuation concerns have intensified alongside Intuitive Machines' year-to-date run; LUNR currently trades at an exceptionally elevated multiple of nearly 40x sales. 

On Wednesday, management framed the capital raise as a strategic measure to maintain financial flexibility for expansion, acquisitions, research and development, and working capital needs.

But the program, managed by a consortium of 10 financial institutions including Barclays, Cantor Fitzgerald, and Deutsche Bank, collecting up to 3% commissions, allows continuous share issuance at prevailing market prices. 

This structure creates a persistent overhang since market participants must price in ongoing dilution from additional share supply entering the market at unpredictable intervals. 

How Wall Street Recommends Playing Intuitive Machines

The convergence of multiple headwinds explains why the SpaceX IPO is only partially responsible for Wednesday’s dip in Intuitive Machines shares — one that Wall Street recommends buying. 

The consensus rating on LUNR remains at “Moderate Buy,” with the mean price target of about $41 indicating potential upside of roughly 20% from here. 

In short, while analyst sentiment remains bullish and the long-term lunar economy thesis is compelling, the stock’s near-term trajectory will likely depend on whether SpaceX’s listing creates a rising tide that lifts all boats or concentrates capital flows into Musk’s company at the expense of smaller peers. 

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