If You're Still Holding NuScale, Here's 1 Catalyst That Might Make You Sell
Key Points
NuScale Power stock is trading down 75% over the last 12 months.
A make-or-break catalyst should be the focus of every SMR investor.
- 10 stocks we like better than NuScale Power ›
NuScale Power (NYSE: SMR) may soon begin construction on the world's largest small modular reactor (SMR) nuclear facility.
SMRs are essentially miniature nuclear power plants, and NuScale is -- at least for now -- the only company cleared by regulators to build an SMR system in the U.S. While typically more expensive on a per-megawatt basis than conventional nuclear power plants, SMRs can generally be built quicker with lower upfront costs. And because they are modular, meaning they can be scaled up to increase energy generation capacity in the future.
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All of these advantages are attractive to artificial intelligence (AI) companies, which need more power fast.
Image source: Getty Images.
Despite promising growth potential, NuScale stock has fallen roughly 75% over the past 12 months. If you still hold shares, there's one upcoming catalyst that should make it clear whether you should keep holding or jump ship.
This catalyst will be critical to NuScale Power's future
Hype for SMRs has risen sharply in recent years. But it's important for investors to remember that while 80 SMR projects are in some stage of development worldwide, only two have ever been built. Throughout history, more SMR projects have failed than succeeded. In 2023, NuScale's biggest customer at the time pulled out of the deal due to rising costs. While there were specific challenges unique to that project, "the financial challenges and cost trends witnessed in that case will afflict any SMR project," warned one industry analyst.
NuScale stock has struggled over the past year, largely due to rising uncertainty about its customer pipeline. Yes, NuScale may soon start construction on the world's largest SMR system. But the customer involved in that deal hasn't signed anything financially binding. It could pull out at any time.
Earlier this year, however, NuScale's CFO told investors that a binding financial agreement could be signed by the end of 2026 (though the timeline may extend a bit into 2027). If a deal is signed, it would instantly validate NuScale's business model. If a deal cannot be signed for any reason, the entire investment thesis for the stock could collapse.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
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