Oklo (OKLO +8.88%) is a company that has tremendous long-term growth potential, as its small fission power plants can be a key part of the energy solution. At a time when investments in artificial intelligence (AI) are creating a need for more energy and data centers, many retail investors see Oklo's powerhouses as being integral to AI's long-term growth.
And while the stock can be seen as an intriguing long-term investment with significant upside, there's still significant uncertainty ahead. Before you even consider buying Oklo stock, you need to ask yourself: Can you handle seeing significant losses from the company for several years?
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Commercialization may not happen until 2028, and profitability likely much later than that
While Oklo has a design in place for its Aurora powerhouse, the company doesn't expect to begin commercial operations until 2028. And while it'll try to generate some revenue before then, it'll likely be fairly minimal at best.
Even once it has its first powerhouse up and running, it may take even longer than that for the business to turn a profit. This is a capital-intensive operation as building these power plants will take a considerable amount of time and money, especially to scale them. The company's operating expenses have been north of $50 million in each of the past two quarters, and that's only going to increase as it begins operations and starts expanding.
This means that, while the company may generate revenue by 2028, it'll take far longer than that to turn a profit and generate positive free cash flow. That means you'll need to brace for the reality that the company will continue to incur significant losses for several years, and with that, the risk of dilution is high.
NYSE: OKLO
Key Data Points
Oklo's stock is struggling, and it could have further to fall
This year, Oklo's stock has declined by 22% as investor sentiment has cooled around the business. However, that doesn't mean it's become a cheap stock to buy. Even with the drop in value, its market cap remains fairly high at around $10 billion. That's quite a premium for a business that isn't generating any revenue and that possesses tremendous uncertainty.
While you may be optimistic about Oklo's potential and its long-term growth opportunities, that doesn't mean the stock is a surefire winner. There are many clean energy companies out there, and Oklo is simply one of the most popular ones today. But with a high valuation and some big question marks about its future, there may be more of a decline coming.
Before you consider buying the stock, you need to ask yourself whether you can stomach persistent losses and volatility, because that's likely what you'll get with Oklo for the foreseeable future.
