Intuitive Machines Says It Has a "Fortress-Like Balance Sheet." Is It True?

Lunar exploration company Intuitive Machines (NASDAQ: LUNR) shot up like a rocket after reporting earnings last week (well, it did before an inflation- and tariff-inspired temper tantrum crashed the stock market on Friday). If you own Intuitive stock, you probably know this already. What you may not realize, though, is that Intuitive Machines' stock rocketed higher not because of its earnings...but despite them. Rather than its 30% one-day share price gain being inspired by an "earnings beat," Intuitive Machines actually missed its earnings numbers.

And it missed on guidance, too.

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Intuitive Machines Q4 earnings and 2025 guidance

Heading into the fourth quarter, Wall Street analysts forecast no profits for Intuitive Machines but $55.8 million in quarterly sales. The company sadly reported only $54.7 million, albeit this was up 79% year over year. The worse news is that management forecasted that in fiscal 2025, it would generate only $250 million to $300 million in sales for the year.

That's well short of the $342.5 million in annual sales that Wall Street was modeling.

Despite the weak Q4 numbers and the even weaker guidance, though, investors bought Intuitive Machines stock hand over fist last week. Why? Basically, because Intuitive was able to get investors excited about its even longer-term prospects.

Image source: Getty Images.

This space stock's got high hopes

CEO Steve Altemus describes Intuitive Machines' current status thusly: "Financially secure, debt-free ... ready to take the next leap [and] with a fortress-like balance sheet." From this position, management plans to seek "the highest-return opportunities" as it expands its business from delivering payloads to the moon to building a new communications system linking the moon and Earth.

I don't know about you, but when I read that, it's the phrase "fortress-like balance sheet" that jumped out to me. For the past several years, the overarching theme of space stocks similar to Intuitive Machines -- which went public in special purpose acquisition company (SPAC)-sponsored initial public offerings (IPOs) at inflated valuations and years before most had any chance of earning profits -- has been a tale of burning cash, selling shares to raise more cash...and then burning through that cash as well.

Suffice it to say that finding a space stock with a "fortress-like balance sheet" sufficient to carry the company all the way to profitability and positive free cash flow is something I find very intriguing. But is it true?

Crunching the numbers at Intuitive Machines

Let's take a look at the numbers. Intuitive Machines ended 2024 with $210 million in the bank. Redeeming its warrants earlier this year (i.e., encouraging holders to cash in their warrants for stock) nearly doubled those cash reserves, lifting Intuitive to $385 million in cash.

Now, Intuitive reported $347 million in net losses for 2024, which doesn't sound great. But actual cash burn (negative free cash flow) was less than $68 million, down 10% from the $75 million burned in 2023. Assuming even just steady-state cash burn from here on out, this would imply Intuitive Machines has at least five years of smooth sailing before cash starts to get right.

Granted, looking out over the next few years, analysts who follow Intuitive anticipate that capital spending will rise modestly as the company continues refining its lunar landers for NASA and builds out its Near Space Network (NSN) for Earth-to-moon communications under the $4.8 billion, 10-year NASA contract it won last year. Still, we're probably talking capex spending only in the range of $50 million to $65 million a year, according to data from S&P Global Market Intelligence. Meanwhile, analysts see money starting to flow into Intuitive from the NSN contract as early as 2027 (when positive operating cash flow could pass $60 million).

Image source: Getty Images.

Is Intuitive Machines stock a buy?

Long story short, here's how I'm looking at Intuitive Machines' stock and its "fortress-like balance sheet" today: The best-case scenario is that the company continues to burn cash this year and next but reaches positive free cash flow in two years, 2027. The worst-case scenario is that the company needs more time to become cash-self-sufficient- but it's got cash reserves sufficient to last for five years.

While not generating positive free cash flow yet, I see a clear path to Intuitive Machines getting there. This, in a nutshell, is why I've personally decided to buy Intuitive Machines stock and why I'll buy more on any (unjustified) dips going forward.

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Rich Smith has positions in Intuitive Machines. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.