We recently published a list of 10 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where Intuitive Machines, Inc. (NASDAQ:LUNR) stands against the other stocks.
FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
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A satellite being released from a launch vehicle, heading into space.
Intuitive Machines, Inc. (NASDAQ:LUNR)
Number of hedge fund holders: 11
Intuitive Machines, Inc. (NASDAQ:LUNR) is a diversified space company, which is focused on space exploration. The company provides and supplies space products and services that enable sustained robotic and human exploration to the Moon, Mars, and beyond.
It is the only commercial operation that has a proven lunar capability. This gives the company a first-mover advantage in the growing lunar industry. Moreover, the company’s success in its first lunar mission further validates the technology and business model. Intuitive Machines, Inc. (NASDAQ:LUNR)’s strength of first-mover advantage is backed by strong links it has with NASA and proven earth-to-moon capability. Moreover, the company secured ~$70 million in new backlog, which provides some revenue visibility.
Intuitive Machines, Inc. (NASDAQ:LUNR) is the only company that has a lunar-to-earth commercial communications system, a well-established operational mission control building, and patent-protected technologies.
The company’s revenues are expected to be aided by promising joint ventures. It owns ~90% of Space Network Solutions, which won an OMES III contract to offer servicing of NASA’s LandSet-7, a satellite launched in 1999. Next, Jacobs Engineering Inc. and Intuitive Machines, Inc. (NASDAQ:LUNR) have entered into a partnership under a subcontracting agreement for NASA’s JSC engineering and Science program. Intuitive Machines, Inc. (NASDAQ:LUNR) expects full-year 2024 revenue of $210 million – $240 million, which exhibits 2.6x – 3x of its prior-year sales.
The company’s 2Q 2024 results highlighted its competitive advantages in offering delivery, data transmission, and autonomous operations. These are the 3 pillars of space commercialization. In 2Q 2024, the company’s revenues came in at $41.4 million, reflecting a rise of 130% year-over-year. This growth stemmed from the OMES, LTVS, and JETSON low-power nuclear satellite projects. The revenues included the effect of changes in estimates associated with NASA CLPS contract modifications.
Analysts at Benchmark restated a “Buy” rating on the shares of Intuitive Machines, Inc. (NASDAQ:LUNR), giving it a price target of $10.00 on 14th August. Intuitive Machines, Inc. (NASDAQ:LUNR) had 11 hedge funds long its stock in the second quarter, with a total stake value of ~$7.36 million.
Overall LUNR ranks 10th on our list of stocks that will go to the moon. While we acknowledge the potential of LUNR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than LUNR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.