How intuitive machines cut the cost of landing on the moon by 86%

Boy oh boy does NASA ever love Intuitive machines (MON 7.54%)! The small space company landed a robot on the moon earlier this year — America’s first (albeit unmanned) moon landing since the Apollo program of the 1960s and 1970s.

Intuitive called the mission that broke America’s losing streak IM-1, and later this year, the company will prepare to go to the moon again with IM-2. A third mission — surprise! they’ll call it IM-3 — it’s scheduled to lift off in October 2025.

And now here’s the latest news — there will also be an IM-4.

A $117 million contract for a $313 million company

That latest news dropped late last month with Intuitive Machines’ announcement that it had won a $116.9 million NASA contract to deliver six science and technology payloads to the lunar South Pole.

In addition to the NASA payloads (and one for the European Space Agency), Intuitive anticipates supplementing its revenue from this mission by carrying additional “commercial payloads” for other customers on the same lander. So it’s hard to say exactly how much this mission will yield for Intuitive — but the minimum value is at least $116.9 million.

Is this good news for Intuitive Cars? Investors seem to think so. They drove Intuitive Machines’ share price up 20% in the two weeks since the news broke. And I would agree that sounds favorable. In the past year, Intuitive’s total revenue was less than $158 million. The new NASA contract promises to be worth almost that much, just for one mission.

Why NASA Should Love Intuitive Cars (And Taxpayers Should Too)

As much as investors (and NASA) love Intuitive Cars, taxpayers should love them even more.

Consider: 58 years ago, America’s first robotic moon landing was the Surveyor 1 mission, launched in 1966 (three years before Apollo 11 put boots on the moon). During the Surveyor program, NASA launched a total of seven landers, five of which landed safely on the Moon. The total cost of the program was $469 million — about $4.2 billion in today’s dollars. So everyone successful the landing cost about 840 million dollars.

Compared to this, the $117 million in taxpayer dollars that Intuitive Machines is charging for the IM-4 (very similar to the $118 million paid for the IM-1) represents a savings of about 86%. Meanwhile, due to runaway costs on Boeing– powered by the Space Launch System rocket, Project Artemis’ mission to return astronauts to the Moon already looks likely to cost More than the initial cost of the Apollo program (in inflation-adjusted dollars).

What it means for investors

The fact that this space company has proven capable of delivering payloads to the moon — and saving taxpayers — should make a lot of people happy. But will investors be happy with Intuitive Cars?

That largely depends on how successful Intuitive Machines is in winning more NASA contracts as well as private commercial companies. If Intuitive succeeds in launching two missions this year, it will be on track to meet analysts’ forecasts of nearly tripling revenue from 2023 to more than $220 million in 2024. Additional contract wins could double revenue again by 2026. (Analysts predict $475 million. )

That would likely require Intuitive Cars to fly four lunar missions a year — not an unreasonable goal, given Intuitive’s success in placing the first American lander on the moon in more than 50 years, giving it the position of poles in this industry. Not an unreasonable goal, if the company proves capable of landing two on the moon this year.

Analysts believe that if they are intuitive do what by managing to grow revenue at that level, it will have enough business to start earning a profit ($0.24 per share in 2026) and also positive free cash flow ($25 million).

Of course, even assuming all of this happens in time, that means Intuitive Machines stock today is selling for 24 times fully diluted earnings and 30 times free cash flow — that it will neither earn nor generate two more years. This is a rich assessment. Intuitive machines will have to maintain and even accelerate their growth rate to make it worthwhile.