Wild Stock to Watch- Intuitive Machines (LUNR)

[Recyclersteve]

You may have seen this Thursday on your local or national news. In case you weren't listening carefully, Intuitive Machines (Ticker: LUNR) successfully landed a module on the moon for the first successful landing since 1972, a whopping 52 years ago when Richard Nixon was President.

There are likely gonna be people all over the country (and especially in Houston (where LUNR is HQ'ed) and Florida where many rockets are launched) that will be interested in trying to figure out a way to play this one. Many might call their brokers and ask if they can buy SpaceX stock. SpaceX made the rocket which carried the module from Intuitive Machines to the moon.

No, you can't buy stock in SpaceX. That company is owned by Elon Musk and there is no stock whatsoever for you and I to buy. BUT, Intuitive Machines has stock available to buy and it is nowhere near the highest it has been in the past year or so. Not even close.

Look back on a chart for price history on LUNR. On 2/15/23 (a bit over a year ago) it was as low as $10.10 a share. The very next day it had a big surge in volume and closed at a whopping $44.77 a share. Just three trading days later (2/22/23) it was as high as a whopping $136.00 a share! It didn't stay there long at all, nor would I have expected it to. THE VERY NEXT DAY it was down all the way to $17.50 before closing at $20.30.

Think about this. It was a brand new stock and it was about a year before they would have a mission to the moon. Nobody could really handicap what their chances of a successful landing would have been a year ago. Yet people still paid a super high price for the stock.

My point is this. Now the company is being showcased on national TV and they just had a successful lunar landing! This stock deserves to have another sharp move up over the next one to several trading days. The fact that tech stocks and the market overall did great on Thursday will no doubt give some people a little more desire to take a few chances on the market and, specifically, individual names that are acting well.

I'm not suggesting that LUNR is going to $136 again, or even necessarily close to it. Keep in mind that there are always people who want to bet on things going down, not up. They are the short sellers and hedge funds. They can get crushed on a stock like LUNR when it went from $10 to $136 in just a week last year. I'm assuming they will be watching the stock like a hawk this time and determined to try to keep it from getting anywhere near that high again. But they have to pay fees to borrow heavily shorted stocks and the fees can sometimes be 1% PER DAY or more. In other words, if their timing isn't impeccable, they can get crushed by betting against a stock like LUNR.

So this is a high risk/high reward stock. If you are interested in playing it and don't have a lot of stock market expertise and risk taking ability (or very deep pockets), I'd consider buying a small amount of stock and then placing another order to buy it again at perhaps 20-30% lower. Just pencil it out so that you aren't making this a total gamble. For instance, someone with a $1 million account who says "I'll spend $5k now and buy another $5k on a 25% pullback. Then, I can't lose more than 1% of my account value in the worst case." Something like that would be reasonable for many people. Remember, I don't know your financial situation as well as you do.

I have bet on this stock 6 times in the past year (betting on it going up and yes, even down about a year ago). Thankfully, I've made money each time. I wouldn't want to dare shorting this stock right now (that could be suicide), but realize that this is a free country and some will want to bet on the stock going down. There is always a possibility someone could create a false rumor in order to enhance their chances of profiting on their trade. That's just the nature of the beast, unfortunately. That's partly why I don't like to buy something just once. I like to keep some of my firepower in reserve in case it is needed.

Another aspect to consider that I will speculate on is this. Since LUNR is on a SpaceX rocket and has just had a successful landing, Elon Musk (and/or perhaps even Jeff Bezos) might consider offering to buy out LUNR while it is still a very small company! They could pay a very sizable premium for the stock and in 5-10 years that might still be considered a bargain. Insiders at LUNR own over 38% of the stock, which is quite high. They likely wouldn't entertain the idea of selling the company without being able to get a substantial premium over where the stock is right now. Think about that for a bit!

I truly believe this will be fun to at least watch and possibly play. But please wear a seat belt!

[thecrazyone]

it's actually down $2 today

[Recyclersteve]

Not true. It has been up from yesterday’s regular session close all day long. At 1:48 EST it is up just over 20% on the day.

Yes, it has pulled back from the intraday high, but I do expect a roller coaster ride on this one. I bought even more shares in the low $10’s this morning.

All this takes is an upgrade from an influential analyst or a potential buyer to get it moving. This is a VERY PROFITABLE company that hasn’t really been discovered yet, in spite of the news the past few days.

Don’t go all in at one time and you should be ok.

[Recyclersteve]

LUNR stock finished Monday down a whopping 34%. Fortunately, at the end of Friday I was in a situation where I could make $ whether LUNR went up or down.

On 3 LUNR trades Monday I was able to net over $2,700 in profits, even though it was down so sharply. How is that possible? First, I sold covered call options Friday in 2 different accounts for $1-1.01/share. I bought them back Monday for 27-35 cents each. The difference, roughly 70c/share was my profit.

Also, I bought shares Friday in after hours for just $6.06. Those were sold Monday for a profit.

Now, if the stock had gone up as much as I was expecting, I’d have made perhaps 5-8x as much as I made today. But to be able to profit even when things are not going your way is something to look into.

An example I like to use is Warren Buffett. If he bought a stock and it quickly went down 34%, do you think he’d panic and sell? Almost certainly not! He might even think it was on sale and buy more. And, if it went to zero, that one bad decision wouldn’t come close to bankrupting him, since he wouldn’t put a major part of his portfolio in any one company. Admittedly, that’s harder for those of us who aren’t billionaires, but we can do something similar on a smaller basis.

That’s one reason I like both options (puts and calls) and selling short stocks (betting on them going down, not up).