Thanks to growing interest from tech giants like Amazon (AMZN) and Google (GOOGL)), nuclear power is enjoying a renaissance. While riding the wave of investors’ enthusiasm, Oklo (OKLO), a Sam Altman-backed nuclear power company, has seen a 177% surge in its stock over the past month. The shift towards nuclear is not just about meeting day-to-day energy needs; it’s part of a more significant multi-decade megatrend of increasing demands for energy and sustainable solutions. With data center power consumption predicted to soar by 160% by 2030, driven mainly by AI demands, nuclear energy is becoming the frontline defense against a potential energy crisis.
Consequently, Small Modular Reactors (SMRs), like those developed by Oklo, are increasingly viewed as a viable solution to meet that need. OKLO is well-positioned to be at the forefront of this burgeoning industry, making the stock a compelling option for forward-looking investors.
Oklo Making Progress Toward Final DOE Approval
Oklo Inc. designs and develops fission power plants and strives to provide commercial-scale energy. It also offers a unique service: recycling used nuclear fuel.
Recently, Oklo reached a vital milestone on its journey towards efficient energy generation. The U.S. Department of Energy (DOE) approved the Conceptual Safety Design Report (CSDR) for its Aurora Fuel Fabrication Facility, which is based at Idaho National Laboratory (INL). This approval signifies that the facility is deemed safe, allowing Oklo to progress toward utilizing recovered nuclear material to fuel its first commercial Aurora powerhouse.
This CSDR approval is part of DOE’s ongoing review process. Oklo anticipates the next steps, including a Preliminary Documented Safety Analysis before construction, followed by a Documented Safety Analysis post-construction and commissioning.
Oklo is continuing its dialogue with the Nuclear Regulatory Commission (NRC) as it prepares for a pre-application readiness assessment later this year. Management has suggested that the first powerhouse could come online by the end of 2027.
Oklo’s Recent Financial Results
The company recently reported results for Q2 2024. Operations for the year resulted in a loss of $25.1 million, which included $9.2 million of non-cash stock-based compensation expenditures. The net loss stands at $53.3 million. This includes $30 million of non-cash fair market value losses tied to SAFE notes and $7.8 million of losses in stock-based compensation tied to the recent merger with AltC.
The year-to-date (YTD) operating activities have consumed $17.0 million in cash. This was mainly due to the net loss of $53.3 million, which was somewhat mitigated by $38.9 million of non-cash factors. By the end of Q2, the company held cash and marketable securities worth $294.6 million, mainly due to the $276.0 million received from transactions after deducting fees.
OKLO’s management has offered guidance for 2024, projecting a loss from operations of $40-50 million, resulting in a cash burn of roughly $35-45 million.
Is OKLO a Buy?
The stock had been fairly range-bound before its breakout in October. It now trades at the top of its 52-week price range of $5.35 – $22.93 and continues to show positive price momentum, trading above its 20-day (14.48) and 50-day (11.22) moving averages.
Analysts following the company have been cautiously optimistic about OKLO stock before its recent spike. For instance, B. Riley analyst Ryan Pfingst, a five-star analyst according to Tipranks’ ratings, recently initiated shares coverage with a Buy rating and a $10 price target, noting the company’s advanced nuclear technology provides attractive economics for end users. Its model of selling power directly to customers under long-term contracts is unique in the industry, offering long-term potential upside.
Oklo is rated a Moderate Buy overall, based on the most recent recommendations from three analysts. Their price targets were issued before the jump in the share value, so a recalibration to the upside is likely.
Final Analysis on Oklo
Nuclear power is returning as the world navigates skyrocketing demands for sustainable power solutions, and Oklo is riding the wave. The company’s recent approval from the U.S. Department of Energy is a significant milestone in its journey towards efficient and environmentally friendly energy generation. Oklo anticipates a loss for 2024 but holds a substantial cash and securities balance of $294.6 million. While it is still in its early days, the company’s unique business model and cutting-edge nuclear technology make it a compelling choice for investors eyeing the future of energy.
