On Sept. 8, NuScale Power (NYSE: SMR) had one of its best days on the market in a long time. The small modular reactor (SMR) developer notched an incredible 15% gain, bringing its year-to-date loss down to about 21%.
There was no big news, no updates, and no significant announcements. As has been the case with nuclear energy stocks tied to data centers and the larger AI story, NuScale grew on sector-wide enthusiasm alone.
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That said, NuScale stock does not appear to be a millionaire maker right now, at least not for most investors.
NuScale is in the business of making nuclear reactors, which have brutal up-front costs. Reactor fuel, specialized manufacturing, and engineering work can all melt through cash even before a plant starts producing power.
NuScale’s reactors, to be sure, are small and modular; that means they should be cheaper and faster to build than larger power plants. That said, for NuScale to achieve its best reactor economics, it needs to scale up reactors, and to date, it hasn’t built one for a customer.
Even if NuScale can eventually build reactors at scale, I doubt its profits will be sufficient to support a megacap valuation.
Today, NuScale carries a roughly $4.8 billion market cap despite generating almost no revenue. A $10,000 investment would need a 100-fold gain to become $1 million, while $1,000 would need a 1,000-fold gain. The former would bring NuScale to a $480 billion valuation, while the latter would bring NuScale to a $4.8 trillion valuation. Both seem highly unlikely to me.
The average price target on NuScale is $12.6, implying very small gains (if any at all) in the near future. Investors interested in NuScale should approach it with modest expectations or revisit the stock after it has inked a firm first sale of its SMR.
Should you buy stock in NuScale Power right now?
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