Why X-Energy Stock Collapsed 19.2% This Week
Key Points
X-Energy does not have a reactor design approved today.
Its construction projects keep getting delayed, causing an analyst downgrade.
The company does not generate much in revenue today.
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Shares of X-Energy (NASDAQ: XE) fell 19% this week, according to data from S&P Global Market Intelligence. The nuclear energy start-up saw a delay in its construction timeline and an analyst downgrade, which has dragged down the stock since its April IPO.
Delayed projects
X-Energy is designing advanced nuclear reactors, partnering with Amazon for future reactor builds. Amazon is also a shareholder in X-Energy, providing upfront capital to build projects to power Amazon data centers.
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The roadblock to development stems from the United States government's lack of official approval for any X-Energy reactor, which has delayed the breaking ground of X-Energy's first project with Amazon until 2027. On top of this, Jeffries downgraded the stock this week, from $30 to $22, sending shares sharply lower.
Image source: Getty Images.
Should you buy the dip?
Modern nuclear reactors can be a valuable source of electricity for powering the AI revolution. However, today, X-Energy does not have much of an actual business and will need to spend massive amounts of money upfront in order to get its reactor designs approved and its manufacturing facilities built.
Even after this drawdown, X-Energy stock trades at a market cap of $7.7 billion with barely any revenue. That should keep all investors away from the stock today.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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