Intuitive Machines (NASDAQ: LUNR), a developer of lunar landing and exploration vehicles, went public by merging with a special purpose acquisition company (SPAC) on Feb. 14, 2023. The combined company's stock started trading at $10, skyrocketed to a record high of $81.99 on Feb. 22, but now trades at about $9.

The bulls were initially dazzled by Intuitive Machines' rosy outlook. But like many other SPAC-backed companies, its stock collapsed after it fell short of those expectations. Rising interest rates also popped its bubbly valuations.

At its peak, Intuitive Machines' enterprise value reached $1.48 billion, or 18 times the revenue it would generate in 2023. Today, it's worth only $553 million, or 2.5 times the revenue it's expected to generate this year.

So, could this small-cap space stock blast off again and revisit its all-time highs over the next three years?

How does Intuitive Machines make money?

Intuitive Machines generates most of its revenue from NASA contracts. It originally planned to put its first Nova-C lander on the moon for NASA in 2021, but that launch was repeatedly delayed until it finally landed this February.

That was the first successful U.S. moon landing since 1972, and it compelled NASA to award the company with a new lunar terrain vehicle (LTV) contract in April. The company is also trying to generate ancillary revenue by offering "ride-sharing" services to non-NASA clients who want to deliver their payloads to the moon.

What happened over the past three years?

In its pre-merger presentation, Intuitive Machines claimed its revenue would have a compound annual growth rate (CAGR) of 173%, rising from $102 million in 2022 to $759 million in 2024. It believed it could achieve that by expanding its business beyond its three core contracts with NASA and attracting other clients. Unfortunately, the company missed those estimates by a mile over the past three years.

Data source: Intuitive Machines.

The aforementioned delays for its Nova-C lander seemed to prevent Intuitive Machines from winning any major new NASA contracts in 2022 and 2023 -- with the exception of a new NASA support contract through a joint venture with the technology and engineering company KBR. That tepid growth and murky road map drove away many of its initial investors.

What will happen in the next three years?

However, its successful Nova-C landing in February and the new LTV contract indicate NASA will tighten its relationship with Intuitive in the future. In the second quarter of 2024, the company's contracted backlog grew 55% year over year to $213 million.

That's why Intuitive Machines expects its revenue to soar in a range of 163% to 200% this year. From 2023 to 2026, analysts expect its sales to have a CAGR of 82% to $480 million. They're anticipating net losses in 2024 and 2025 as Intuitive Machines scales up its business, but they also expect its bottom line to turn black again with a net profit of $16 million in 2026.

That's a promising outlook, but it depends heavily on management's ability to fulfill its existing orders, gain new contracts, and expand its ride-sharing business. It also faces plenty of competition from aerospace leaders like Lockheed Martin and similar space-focused start-ups like Firefly Aerospace, Blue Origin, and Ceres Robotics.

Intuitive Machines paid off all of its outstanding debt this July but held only $32 million in cash and equivalents at the end of the second quarter. It says that is enough to fund its operations for at least another 12 months, but it will likely need to take on more debt or issue new shares to keep growing over the next few years. It has already increased its number of shares by 327% since its public debut, and that rapid dilution could continue for the foreseeable future.

It will remain a high-risk, high-reward stock

If Intuitive matches analysts' estimates for 2026 and still trades at 2.5 times sales, its enterprise value would more than double from its current levels to $1.2 billion. If its revenue rises another 30% in 2027 and it maintains the same valuation, it could be worth $1.6 billion. It could generate even bigger gains if investors revalue it as a hypergrowth stock.

Intuitive Machines probably won't soar ninefold to its record highs again over the next three years. But it could still deliver multibagger gains for patient investors if it expands its business.

That said, it's still a volatile stock that could drop even further if the company misses out on future contracts or burns through too much of its cash as it dilutes its existing investors.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.

Where Will Intuitive Machines Stock Be in 3 Years? was originally published by The Motley Fool