Why Oklo Stock Is Dropping Again On Friday
Key Points
Oklo shares dropped over 8% Friday as a hotter-than-expected inflation report raised concerns about prolonged high interest rates.
Oklo is part of the DOE's Reactor Pilot Program, a key government initiative to accelerate new nuclear technology.
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Shares of the nuclear power start-up Oklo (NYSE: OKLO) are pulling back Friday, down 9.4% as of 1:37 p.m. ET. The stock is falling alongside the broader market after today's release of a key inflation gauge, the producer price index (PPI), which came in scorching hot: core wholesale prices jumped 0.8%. That was nearly triple what economists expected.
Why hot inflation is hurting Oklo stock
Why does that matter? When inflation runs hot, the Federal Reserve keeps rates higher for longer, which tends to drag down more speculative stocks like Oklo's -- the company is still pre-revenue, and higher rates lower what investors are willing to pay for future returns. Higher rates mean future earnings are worth less today, and Oklo's earnings are very far in the future -- if they materialize at all.
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Is Oklo stock worth buying on the dip?
While the stock has slid well over 20% in the last month, there have been some positive developments, like the Department of Energy telling Reuters that it expects multiple reactors in its accelerated Reactor Pilot Program, in which Oklo is a participant, will achieve "criticality by the deadline." That's when a nuclear reactor is able to sustain its nuclear reaction and provide consistent power.
Still, Oklo's valuation doesn't make sense to me given the risks and the enormously difficult road ahead. I would hold off until its valuation comes back to earth.
Should you buy stock in Oklo right now?
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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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