Shares of Oklo (OKLO 3.99%) sank this week, according to data from S&P Global Market Intelligence. The company aiming to build what it calls fast-fission nuclear reactors is benefiting from nuclear energy executive orders and a global renaissance for the energy category. Up almost 400% since going public through a special purpose acquisition company (SPAC), the company now has a market cap of $6.8 billion and zero revenue.
Here's why shares of Oklo soared in the month of May.
Betting on a nuclear future
Rising demand for electricity has companies in the artificial intelligence (AI) sector looking for truly reliable and renewable energy. Nuclear energy is the only type of energy that checks off both criteria. Large technology companies investing in data centers, like Amazon and Microsoft, are signing commitments to try and get more nuclear power used in their operations. The White House just released an executive order around Nuclear Power, saying the industry in the United States needs to be reinvigorated.
All of this talk around nuclear power has stocks such as Oklo soaring. The company's founder was at the executive order signing by President Trump, and the company even put out a press release about the matter. It is aiming to build small fission reactors with recyclable material and aims to have plant operations begin at its first site in Idaho by late 2027 or early 2028.
Until then, the company is not generating any revenue. Its stock is all riding on the future and hopes from shareholders that the company can spin itself into one of the nuclear energy leaders of the next few decades.
Image source: Getty Images.
Buy Oklo stock at your own peril
Oklo wants to become a nuclear power giant through its innovative designs. The problem remains around approvals and cash burn. It has a free cash flow burn of $44 million and $200 million in cash on the balance sheet. It says that it aims to get its plant underway by 2028 at the latest, but it has not gotten any approvals from the Nuclear Regulatory Commission (NRC). Competitor NuScale Power Corporation has approval and still doesn't think it can get its reactors up and running until 2030. The timelines don't match up.
Investing in pre-revenue stocks is mighty dangerous. Oklo has no sales, is burning a lot of cash, and has never proven its designs work. There are no approvals by the NRC. The stock has a market cap of $6.8 billion, built on castles in the air. If you buy this stock, you are taking a huge risk with your portfolio.
