By now, you’ve heard the news: Last week, a grant was awarded to NASA A machine that thinks (NASDAQ: LUNR) agreement to provide “GEO and Cislunar Relay Services” that will transmit information from Earth satellites (in geosynchronous orbits, or GEO) to the Moon and back. The agreement, which was issued on Wednesday weekend, triggered a limit Rally in the stock price of Intuitive Machines, which at one time rose 77%.
The stock gave back some of its benefits as investors, lucky enough to get it before the good news, cashed in their benefits. But with recent share prices around $8, this profit is still significant: About 50%.
This is what you can do it is not Note (but), however: Even after that 50% profit, this product opportunity is expensive.
What Intuitive Machines Won
The NASA contract pays Intuitive Machines to “promote lunar orbiting satellites and provide communications and navigation services” to support NASA’s Project Artemis to return astronauts to the moon. Speaking about the offer, Intuitive CEO Steve Altemus explained that the company expects to be paid $ 150 million initially to develop communication satellites.
The largest amount of the contract, $ 4.8 billion, will come later, once the satellite is installed and operational, NASA begins to pay Intuitive to provide communication services between GEO and the moon. NASA will pay the company for “units in the network, about one million units per year … for data transmission and navigation services.”
So you can think of this as a kind of intragalactic mobile internet plan, with Intuitive working on ISP access to NASA. Ultimately, it will take Intuitive about 10 years to complete the $4.8 billion offering, with the first five-year contract expiring on September 30, 2029, and an optional five-year contract (expected) at the end . that, extending the term of the agreement until September 30, 2034.
What this means for investors
For entrepreneurs wondering if they missed the Intuitive Machine train, those days are important.
Over the course of the 10-year deal, the $4.8 billion deal generates up to $480 million in annual revenue — dwarfing Intuitive’s current $158 million in annual revenue. But first, the development process of this contract will “only” about double the company’s income.
It’s still a big win for Intuitive Machines (and as I argued last week, it shows the expansion of the company’s business sectors, from salary transfers to interplanetary communications). But victory will not come all at once, but will be spread and grow slowly over ten years.
Why are Intuitive Machines products still buying?
The fact that the revenue from this deal will grow slowly, does it mean that the investors have choked themselves in pushing the Intuitive Machines stocked up so much last week?
That’s probably different. Despite the fact that, at $8 a share today, Intuitive Machines has been paying double the $4 or $5 a share it’s been paying for most of this year, I think the stock may be overpriced. market price today.
This is why.
Prior to the agreement announcement, several analysts interviewed by S&P Global Market Intelligence did not expect Intuitive Machines products to be profitable before 2026. This was based on the belief that the monthly payment business would require about $475 million in sales. every year to turn. $0.25 per unit profit, and the thinking machine will need a few more years to reach the revenue target.
Surprisingly, despite news of the current Relay Services contract being about a week old, many analysts still They have not updated their forecast for Intuitive Machines products. They haven’t included $150 million in satellite manufacturing in their 2025 forecast. They haven’t applied yet either way Additional funding for intuitive machines sells NASA “millions of units per year” in their forecast until 2027.
But what this means, quite simply, is that Wall Street’s predictions for the market and money in the machine are wrong. Not only will revenue grow faster than research projects, profits will come in faster than expected. Maybe not immediately next year – maybe yesright next year.
But those profits may grow faster than those forecasts indicate.
Although we’ll have to wait for Intuitive Machines’ earnings call in November for details on how management thinks this will play out, it’s not too early to start speculating. So here’s my back-of-the-clothes math: Take Intuitive Paper twice its current earnings in 2027, when earnings are expected to be $0.49 per share. In that case, it’s not a logical thing to think about income and could be double that year’s expected earnings — about $1 a share.
If my plan here is even close to correct, paying $8 a share today for a stock that could earn $1 a share three years from now seems like a pretty good deal to me.
Should you invest $1,000 in an instinctive machine right now?
Before purchasing a product from Intuitive Machines, consider the following:
No The Motley Fool Stock Advisor Research teams have discovered what they believe to be 10 best stocks for investors to buy now… and the instinctive machine is not one of them. The 10 marks that made the cut could produce a comeback in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you deposited $1,000 during our confirmation, you will earn $760,130!*
Product consultant provides investors with easy-to-follow guidelines for success, including guidelines for building a portfolio, regular updates from analysts, and two new stock picks per month. No Product consultant work has more than four times return of the S&P 500 since 2002*.
See 10 stocks »
* Product Advisor will return as of September 23, 2024
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no positions in any of the stocks mentioned. The Motley Fool has a prediction.
$4.8 Billion NASA Contract to Send Robotics Product to the Moon was originally published by The Motley Fool.
#billion #NASA #contract #send #robotic #products #moon