Why Nano Nuclear Energy Stock Just Crashed
Key Points
Nano Nuclear slashed costs and reported a smaller than expected loss last night.
The company still isn't expected to earn a profit for nearly a decade.
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Nano Nuclear Energy (NASDAQ: NNE) stock, a start-up manufacturer of small modular (nuclear) power reactors, tumbled 9% through 1:45 p.m. ET Friday after issuing its Q2 "business update" last night -- just don't call it an "earnings report" -- because Nano isn't earning anything yet!
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Nano Nuclear Q2 not-quite-earnings
The curious thing about investors' reaction to this not-yet-earnings report is that Nano actually seems to have performed better than expected. Nano, you see, is a pre-revenue company, and until it starts generating revenue, all one can reasonably expect it to report is losses. Indeed, according to Yahoo! Finance data, most analysts expected the company to lose $0.21 per share in the quarter. In fact, Nano says it lost only $0.18 per share.
Not "good" news exactly -- but better than expected news, certainly.
How did Nano accomplish this? By cutting costs. General and administrative spending at the company declined 45% year over year. Research and development spending -- which a start-up like Nano probably shouldn't cut any more than absolutely necessary -- also declined, but less: down 16%.
As a result, Nano was able to pare its net loss by 68.5% year over year.
What's next for Nano Nuclear stock
Granted, cost-cutting can only carry Nano stock so far. Eventually, the company needs to commercialize its reactors, build some, sell some, and generate some revenue if it's ever to become a profitable enterprise. Don't expect to see that happen anytime soon, though. Most analysts polled by S&P Global Market Intelligence think it will be 2035 before Nano earns its first profit.
In the meantime, just keeping the losses under control is probably the best we can hope for.
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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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