Oklo Just Hit a 70-Week Low. Here's My Investing Reaction.
Key Points
Oklo stock plummeted after the company announced a $1 billion stock sale.
Many investors should wait until the go-to-market timeline solidifies.
- 10 stocks we like better than Oklo ›
Oklo (NYSE: OKLO) shares just hit a 70-week low after the company announced a $1 billion stock offering. The need to raise more capital is nothing new for the nuclear stock. As I recently outlined, the company has sold more shares nearly every quarter since 2023.
Despite recent weakness in the share price, Oklo's upside potential remains attractive. The company is a leading developer of small modular reactors, or SMRs. These miniature nuclear power plants are perfect for the AI industry, which needs more clean power as quickly as possible.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Before you jump in, there's one catalyst you may want to wait for.
Here's how I'm approaching Oklo stock today
Oklo already has an impressive list of data center operators who have agreed to purchase power from Oklo's SMR facilities. But unlike other SMR stocks that require customers to pony up most of the capital, Oklo aims to finance, build, own, and operate its facilities. That requires significantly more upfront capital and risk, but it lessens the risk that customers must bear.
Image source: Getty Images.
Here's the problem: Oklo has yet to commercialize one of its SMR designs. In fact, the company hasn't even been approved by regulators to construct any of its designs. The company is deep into the approval process, but so are many competing designs from other SMR companies.
The point is this: We still don't know if Oklo's go-to-market strategy will win long term. We also don't know if SMRs in general will be adopted at mass scale anytime soon. Only two SMR systems have ever been commercialized worldwide, despite their existence for decades.
Oklo's go-to-market approach seems compelling. And its designs seem to be in demand by data center operators. But I'll be sticking to the sidelines until there is more market validation of Oklo's real-world adoption timeline, even if that means giving up some potential gains to reduce overall risk.
Should you buy stock in Oklo right now?
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Ryan Vanzo 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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