NuScale Power (SMR +1.58%) has an exciting opportunity ahead, and it is hitting the market at what appears to be a timely moment. But what it doesn't have yet is its first signed-on-the-dotted-line sale. This is an important fact to consider as you digest the news that South Korea is in talks with NuScale Power regarding an investment and a possible reactor project.
NuScale Power has exciting technology to offer
Right now, NuScale Power has regulator approved plans for a small modular nuclear reactor (SMR). SMRs could be a revolutionary development in the nuclear power industry. They are factory-built, small enough to transport to where they are needed, and incorporate the most modern safety systems. Given the spike in electricity demand expected from data centers, artificial intelligence, and electric vehicles, among other things, NuScale Power could be at the cusp of a huge, long-term opportunity.
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There's just one problem: NuScale actually needs to sign its first SMR contract before it has any hope of achieving that long-term opportunity. It isn't that the company isn't trying. It has a possible six-reactor deal in Romania and a partnership with ENTRA1 Energy and the Tennessee Valley Authority. But neither of those has yet turned into an actual sale. So the potential deal in South Korea is really just one more iron in the fire.
The big test will be building and installing the first SMR
Getting its first SMR deal across the finish line will be a huge achievement for NuScale Power. However, it won't be enough to prove the company has a sustainable business model. That's because it hasn't yet built and delivered an SMR for commercial use. So even if South Korea turns into the company's first customer, which would be great, there is still a lot of work to be done.
NYSE: SMR
Key Data Points
NuScale Power is a high-risk nuclear power start-up. It is losing money and will likely continue to do so for years, as it attempts to build what amounts to a manufacturing business around SMRs. Only the most aggressive investors should buy it. As noted, a deal with South Korea would be great news (as would a signed deal with any other customer), but this stock should be viewed as a long-term investment because the business is very early in its development.
Most investors probably shouldn't step aboard until the first SMR has actually been delivered. Risk-averse investors may even want to wait until the company becomes sustainably profitable.
