Intuitive Machines Stock Tumbles After Company Prices $300M Convertibles

Yahoo

21 hours ago

Aug 14 - Shares of Intuitive Machines (NASDAQ:LUNR) fell about 10% in premarket trading on Thursday after the space-tech firm priced an upsized $300 million offering of 2.500% convertible senior notes due 2030. The deal jumped from an originally announced $250 million size and gives initial purchasers a 13-day window to buy an extra $45 million. The offering should close on Aug. 18, 2025.
Warning! GuruFocus has detected 5 Warning Signs with LUNR.
The notes carry a 2.500% annual coupon, payable semiannually each April 1 and Oct. 1 starting April 1, 2026. Intuitive Machines estimates net proceeds near $291.8 million after fees; roughly $32 million will cover capped-call hedges and the balance will fund general corporate purposes, including program advancement and runway support.
Convertibles allow the companies to borrow at low rates now and leave optional deferred upside in the form of conversion to equity later, that structure has the effect of reducing immediate interest expense but causing possible share dilution in the future. This negative response by the market could have been prompted by an investor fear of dilution and timeframe as the company continues to achieve the next milestones.
As the cash runway tightens on many small-space players, this capital raise could give Intuitive Machines some form of breathing room, with investors noting how the management intends to use it, whether important mission milestones play out, and how conversion mechanics could alter the number of shares in the period preceding 2030.
This article first appeared on GuruFocus.