We recently compiled a list of the Jim Cramer’s Lightning Round: 9 Stocks in Spotlight. In this article, we are going to take a look at where Intuitive Machines, Inc. (NASDAQ:LUNR) stands against the other stocks featured in Jim Cramer’s Lightning Round.
Jim Cramer, the host of Mad Money, recently discussed a market trend that’s been generating impressive gains, especially when investors target heavily shorted stocks. He explained the phenomenon as he said that investors find success by betting that these companies are in better shape than short sellers expect. According to Cramer, this approach has led to some significant wins in recent times. He pointed out the behavior of short sellers, noting that when things go wrong for them, they panic.
“The shorts always panic when their trades fall apart because, unlike longs, if you’re a short seller, you can lose a lot more than a hundred percent of your investment if the stock goes up too much.”
READ ALSO Jim Cramer on Nvidia Plus Other Stocks and Jim Cramer Recently Discussed These 7 Stocks
Cramer also highlighted that while short sellers can profit when a company fails, it’s a risky game with significant asymmetry. He explained that while a stock’s price can only fall to zero, it has the potential to rise indefinitely. Cramer cautioned that although short sellers might be hoping for a stock’s downfall, they are equally vulnerable to the nightmare scenario of infinite losses if the stock price continues to climb.
In such situations, when short sellers run out of options, they are forced to buy back shares, which can send the stock price even higher. For shareholders, this scenario can be advantageous. While short sellers may be a threat when predicting a stock’s decline, their need to buy back shares can act like rocket fuel for the stock’s price when good news emerges.
“If you’re a shareholder, they’re your worst enemy when they’re talking about a stock going to zero. But once the stock starts soaring on any good news, the shorts are your best friend because their forced buying is like rocket fuel and they can’t stop the propulsion while you just get to go along for the ride.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the recent episodes of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A satellite being released from a launch vehicle, heading into space.
Intuitive Machines, Inc. (NASDAQ:LUNR)
Number of Hedge Fund Holders: 17
Cramer called Intuitive Machines, Inc. (NASDAQ:LUNR) stock a “hot stock” and commented:
“Now that stock is up a great deal. It’s kind of the polar opposite of Nvidia in that it makes no money. Matter of fact, you lose a lot of money. That said: Look, I know a hot stock when I see it. I’m not gonna fight the speculation for space anymore because everybody wants a piece of what Musk has for space, but he doesn’t have it yet. So I’m not gonna bless it, but I’m not gonna fight it.”
Intuitive Machines (NASDAQ:LUNR) is engaged in designing, manufacturing, and operating space products and services in the U.S., focusing on lunar exploration, satellite delivery, space station servicing, and lunar data services to support scientific and human activities on the moon. For the third quarter, the company reported significant growth, more than doubling its revenue compared to the previous year. The company’s revenue reached nearly $58.5 million, marking an increase of 359% year-over-year, with a year-to-date total of $173.3 million.
Despite this growth in revenue, the company posted a loss of approximately $55.5 million, in contrast to a profit of over $33 million during the same period in 2023. However, the company also saw an improvement in profitability, recording a positive gross margin of $4.1 million for Q3.
During the quarter, Intuitive Machines (NASDAQ:LUNR) was awarded a data services contract from NASA for the Near Space Network (NSN), which has a maximum potential value of $4.82 billion. This contract is a significant milestone for the company, enhancing its capabilities in data transmission for in-space communications and navigation. The quarter also concluded with the company holding a cash balance of $89.6 million, the highest cash balance at the end of a quarter in the company’s history.
Overall LUNR ranks 7th on our list of the stocks featured in Jim Cramer’s Lightning Round. While we acknowledge the potential of LUNR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.