Why Oklo Stock Slumped 6.3% Today
Key Points
Oklo disclosed a $1.5 billion at-the-market equity offering, allowing the company to sell shares over time at its discretion.
Oklo remains pre-revenue and faces significant hurdles before it can commercialize its small modular reactor technology.
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Shares of Oklo (NYSE: OKLO) fell today, finishing down 6.3%. The decline came as the S&P 500 and Nasdaq Composite rose 0.1% and 0.3%, respectively.
Oklo, a nuclear energy company developing small modular reactors, saw its stock drop sharply today after a regulatory filing revealed the company is seeking to raise up to $1.5 billion in an at-the-market (ATM) offering.
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Oklo announces $1.5 billion at-the-market stock offering
After markets closed on Thursday, Oklo filed a prospectus with the Securities and Exchange Commission (SEC), disclosing that the company has reached a deal to raise up to $1.5 billion. An ATM offering allows Oklo to sell its shares at its own discretion over the long term.
Investors sold the stock in anticipation of dilution -- the filing itself acknowledges this risk, cautioning investors that they "may experience immediate and substantial dilution in the net tangible book value."
Image source: Getty Images.
Can Oklo justify its valuation
Stock sales of this magnitude are expected from a company with no revenue and substantial costs, especially after its shares have skyrocketed 400% in the past year. Major obstacles lie ahead that could prove fatal to the start-up -- even if it perfects its technology and gains regulatory approval.
The company will likely need to raise even more capital well into the future to fund the construction of its reactors. Given the company's already pricey valuation, I would avoid Oklo unless you have a particularly high risk tolerance.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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