NuScale Power Faces Challenges Amid Market Weakness
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 23 2024
0mins
Source: Coinmarketcap
NuScale Power Corp's shares rose by 5.02% as it crossed above the 5-day SMA, despite the broader market decline with the Nasdaq-100 down 0.21% and the S&P 500 down 0.04%.
The company is currently facing significant challenges in securing its first reactor sale, which has led to a 75% drop from its 52-week high. Although NuScale's small modular reactor (SMR) design has received regulatory approval and boasts modern safety features, the absence of actual customers has diminished market confidence. The company is actively pursuing potential agreements with foreign and U.S. firms, but without concrete sales, its business model remains vulnerable. The U.S. government's support for SMRs could provide future opportunities if NuScale can successfully sell its reactors.
Investors are advised to remain cautious as the company navigates these hurdles. While the stock's recent rise may suggest optimism, the lack of sales and ongoing market challenges highlight the risks involved in investing in NuScale Power at this time.
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Analyst Views on SMR
Wall Street analysts forecast SMR stock price to rise
13 Analyst Rating
5 Buy
6 Hold
2 Sell
Hold
Current: 10.500
Low
18.50
Averages
32.77
High
60.00
Current: 10.500
Low
18.50
Averages
32.77
High
60.00
About SMR
NuScale Power Corporation is a provider of proprietary advanced small modular reactor (SMR) nuclear technology. The NuScale Power Module, the Company's SMR technology, is a small pressurized water reactor that can generate approximately 77 megawatts of electricity (MWe) or 250 megawatts thermal (gross) and can be scaled to meet customer needs through an array of flexible configurations of up to 924 MWe (12 modules) of output. In addition to the sale of NPMs, it offers a diversified suite of services throughout the development and operating life of the power plant. The Company's suite of services is planned to include licensing support, testing, training, fuel supply services and program management, among others. It serves a range of customers consisting of domestic and international governments, utilities, state-owned enterprises and technology and industrial companies in need of carbon-free, reliable energy.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Significant Price Drop: NuScale Power's shares closed at $10.50 on Friday, down 12.50%, indicating a reassessment of its investment narrative by traders amidst evolving policy support for small modular reactors.
- Surge in Trading Volume: The trading volume reached 49.2 million shares, approximately 45% above the three-month average of 31.2 million shares, highlighting increased market attention on NuScale despite its poor performance.
- Industry-Wide Weakness: Peers like Oklo and Nano Nuclear Energy saw declines of 11.16% and 9.94%, respectively, reflecting broad weakness across SMR developers, as investors adopt a cautious stance towards speculative energy stocks.
- Uncertain Future Outlook: While NuScale could potentially tap into the AI data center market, this transition is still years away, and investors should expect continued volatility until the company reports commercial applications.
See More
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- Rise of Small Modular Reactors: EPA Administrator Lee Zeldin emphasized in an interview that the development of small modular reactors is a key component of the Trump administration's push for U.S. energy dominance, driving market interest in companies like NuScale, Oklo, and Nano Nuclear.
- Positive Market Reaction: Following Zeldin's optimistic comments, NuScale shares rose about 5%, while Oklo and Nano Nuclear shares each increased by about 2%, reflecting investor confidence in the nuclear sector, particularly against the backdrop of rising electricity demand from artificial intelligence and data centers.
- Investor Sentiment Optimistic: Despite SMR and OKLO stocks being down 15% and 9% year-to-date, respectively, NNE's stock has risen 26% over the past 12 months, while the VanEck Uranium and Nuclear ETF has increased by 34% in the same period, indicating a long-term bullish outlook on nuclear energy.
See More
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- Rising Project Costs: NuScale's first major project, the Carbon Free Power Plant, saw costs soar to approximately $9 billion before its cancellation in 2023, which not only impacted the company's financial health but also increased pressure in securing customers.
- Lack of Customer Orders: Despite the advantages of NuScale's SMR technology, including scalability, factory construction, and round-the-clock clean power, the company has yet to secure any formal customer orders, placing it at a disadvantage in the competitive nuclear energy market.
- International Collaboration Potential: NuScale's partnership with South Korea's Doosan Enerbility, established in 2019, shows signs of potential investment interest from South Korea in U.S. nuclear industries, which could open new opportunities for SMR technology sales, although no specific agreements have been reached yet.
- Severe Financial Condition: The company reported a net loss of approximately $44 million in the first quarter, with revenue of only about $565,000, and while annual revenue is expected to grow over the next two years, it remains insufficient for profitability, prompting investors to carefully assess risks.
See More
NuScale Power Shares Rise Amid Promising Growth Prospects
- Stock Recovery: NuScale Power's shares have risen nearly 30% over the past two weeks after a 50% decline, indicating renewed market interest in its small modular reactors, although the current price remains 75% lower than its all-time highs.
- Market Opportunity: The company targets a $10 trillion global market driven by rising electricity demand, particularly from AI technologies, highlighting its strategic significance in the nuclear energy resurgence and potential as a key player in future energy supply.
- Financial Challenges: Despite growth potential, NuScale reported only $31.5 million in sales last year with a net loss of $355 million, forcing management to sell 39.3 million shares in Q4 2025 to raise $750 million, illustrating the difficulties in its commercialization journey.
- Shareholder Dilution Risk: The total shares outstanding have more than doubled in the past 12 months, and the trend of shareholder dilution is likely to continue, prompting investors to carefully assess the company's execution timeline to determine the investment's viability.
See More
