Holtec Nuclear Corporation recently filed for an initial public offering, planning to list on the Nasdaq stock exchange under the ticker HNUC. Here's why that IPO should worry Oklo (OKLO +3.59%) investors. Holtec has something Oklo lacks: revenue and earnings. That should make it a more appealing alternative for investors seeking exposure to the nuclear renaissance in the U.S.
Here's a look at this upcoming nuclear energy stock and how it differs from investing in Oklo.
Image source: The Motley Fool.
Introducing Holtec Nuclear
Unlike Oklo, Holtec isn't a pre-commercial nuclear start-up. It has been around since 1986 and currently supplies nuclear equipment, manages spent nuclear fuel, and, like Oklo, develops small modular reactors (SMRs). Its core business of nuclear fuel and waste management funds its current operations. The company generated $165 million of revenue and $17.8 million of net income during the first three months of this year. While that was down from $177.7 million in revenue and $25.4 million in net income in the prior-year period, it's an already-functioning commercial business that supports its growth initiatives, including its SMR program.
Holtec is leading the restart of the 800-megawatt Palisades nuclear plant in Michigan, which shut down in 2022 after 50 years of operation. Additionally, it plans to build two SMR-300s at that site. It has already received $400 million from the U.S. Department of Energy to support its development plans at this site. Holtec aims to use its IPO proceeds to further its SMR program, expand its manufacturing capacity, and support its other growth initiatives. It has several planned SMR sites beyond Palisades, including at the decommissioned Oyster Creek nuclear power plant in New Jersey, where it plans to deploy four SMR-300s.
NYSE: OKLO
Key Data Points
Why Holtec's IPO should worry Oklo investors
Now let's contrast Holtec's business model with Oklo. The SMR start-up generated a mere $1.2 million in revenue during the second quarter. It didn't record any revenue during the first quarter or during the first six months of last year. Meanwhile, it has been piling up losses. Its net loss totaled $48.5 million in the second quarter and $81.6 million year-to-date. Oklo is a long way from generating meaningful revenue, as it likely won't book its first commercial power revenue before 2028.
Oklo is still in the early stages of building a scalable, vertically integrated nuclear platform from the ground up, including power, fuel, and isotopes. That's expensive. It spent $126.9 million on capex in the first half of this year and an additional $25.7 million on acquisitions to expand its capabilities. That's on top of the $65.5 million in cash it used in operating activities. The company does have some breathing room, as it ended the second quarter with $3 billion of cash and marketable securities after issuing $1.9 billion of stock through its at-the-market program. However, continued cash burn is something Oklo investors will need to monitor until it begins generating meaningful revenue to fund its operations and expansion initiatives.
New competition for investors
Holtec's upcoming IPO doesn't diminish the investment thesis for Oklo. The SMR start-up is building an integrated platform from the ground up, which has high risks but high reward potential. However, it will add a new, lower-risk option for investors looking to play the nuclear renaissance. As a result, it could take a lot longer for Oklo's stock to recover from the more than 75% plunge from its peak.
