Why Oklo Stock Popped on Friday
Key Points
A new idea for using small modular nuclear reactors has surfaced: put them on ships.
Commercial shipping companies say nukes could make ships 39% faster.
Savings could reach $68 million per year for the industry.
- 10 stocks we like better than Oklo ›
On a holiday-shortened trading day Friday, the last day of a holiday-interrupted trading week, shares of small modular (nuclear) reactor (SMR) company Oklo (NYSE: OKLO) charged ahead to close the day up 3.1% (at 1 p.m. ET).
The reason doesn't concern Oklo directly... yet... but it might one day.
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Shipbuilders have nuclear dreams
As nucnet.org reports this morning, shipbuilders and ocean-going shipping transport companies are considering the potential for installing SMRs on containerships, aiming to reduce $68 million in annual fuel costs.
Shipborne SMRs might cost as little as $750 to $1,000 per kilowatt, according to NucNet, which reports that this is "significantly cheaper than conventional nuclear power plants." Powerful SMRs could also help containerships reach faster speeds (increasing efficiency) and support greater cargoes through space savings.
NucNet suggests 39% improvements in speed and 5% greater cargo capacity wouldn't be unreasonable.
Is Oklo stock a buy?
Don't get too excited just yet. Nucnet notes it could take 10 to 15 years to reach the kind of production scale that would drive costs down to $1,000 per kW or below. And there is the cost of the nuclear fuel to consider.
There's also the minor issue of convincing stakeholders, other than the shipping operators themselves, that it's a good idea to have hundreds or thousands of meltdown-able nuclear reactors floating all around the globe.
All of which is to say, it could be a long time before we see widespread adoption of SMRs on civilian merchant ships. Meanwhile, Oklo has $922 million in cash on its balance sheet, but is expected to burn through as much $4.6 billion in cash before (maybe) turning free cash flow positive in 2033.
Even if nuclear cargo ships arrive just 10 years from now, they may arrive too late for Oklo.
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Rich Smith 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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