The reasons for the sale tell investors a lot about trading, investing, small capitalization stocks, and the realities of the stock market.
Intuitive Machines stock started the month under $4 a share with about two million shares trading each day. The stock price, volatility, and trading volume increased materially as the company embarked on its first space mission.
Intuitive’s Odysseus lunar lander left the Earth for the Moon on Feb. 15, atop a SpaceX rocket. Odysseus touched down on the Moon’s surface on Feb. 23. Shares traded as high as $13.25 on Feb. 21 and closed the week at $9.59, up about 150% for the month. Trading volume averaged about 56 million shares a day over the past week.
Friday’s close wasn’t the end of the trading volatility. Shares fell 32% in after-hours trading on Friday, to $6.55 a piece, after investors learned the lunar lander was on its side. It tipped over on landing. The drop came even though NASA called the mission a success and all the scientific payloads were operational. Who knew investors cared so much about the lander’s orientation on the Moon?
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Amid that volatile trading, Intuitive investor Guy Shanon, through his Kingstown Capital, sold 360,000 shares at an average price of about $11.31 each on Feb. 21 and Feb 22. He is left with roughly 1.3 million company shares after the sales, according to the SEC filing disclosing the sale.
Shanon was co-CEO of
Inflection Point Acquisition
,
the special purpose acquisition company that merged with Intuitive in Feb. 2023.
Shanon sold his shares this past week before the landing. He couldn’t have known how it would go or how the stock would trade around the landing event. Instead, sometimes holders of large positions in small companies have to trade when the market lets them. It isn’t easy to sell, or buy, stock when a group of trades represents a significant portion of daily volume.
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That’s the reality of the market that smaller investors don’t always consider. Large holders simply can’t transact big blocks of stock anytime they want. Large buys, or sells, move prices significantly. What’s more, finding a home for a large number of shares isn’t a trivial matter.
Shanon also wasn’t selling stock to unsuspecting investors. Traders have dominated recent stock market action in Intuitive. About 265 million shares have been traded since Odysseus left Earth. That volume means, essentially, each share of Intuitive Machines available to trade has changed hands roughly four times in six trading days.
When traders get involved to that extent things get strange—like a 30% drop despite the company’s customer—NASA—calling the mission a huge success even after knowing the lander tipped over. It’s a good reminder to be cautious and realize that big price moves don’t always mean an underlying business is more valuable.
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As for what Intuitive Machines is worth, investors can look to Wall Street for some help. Four analysts cover the company. The average analyst price target is $10.75 a share. That can be a starting point for investors interested in looking at the long-term prospects of the company.
As for Shanon, he is happy to continue to hold Intuitive stock. His remaining stake is still worth roughly twice as much as it was at the start of the month. “I love the company and I’m excited to partner with them for a long time,” he said.
Write to Al Root at allen.root@dowjones.com
