Shares of Nano Nuclear (NNE) rallied on May 26 after the company announced that it had bought Secured Transportation Services, which specializes in logistics and transportation for the nuclear energy sector. While the up to $13 million cash-and-stock deal could meaningfully reduce Nano Nuclear’s costs over the longer term by moving more operations in-house, there are multiple reasons why NNE stock looks like a risky investment at this point.
Let’s take a closer look.
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About NNE Stock
Nano Nuclear is seeking to build a small modular nuclear reactor in Illinois and is looking to eventually supply electricity to data centers. The company has not yet generated any revenue, but it’s market capitalization stands at $1.4 billion.
Shares of NNE stock are down by about 11% over the past 52 weeks. However, NNE has climbed nearly 18% year-to-date (YTD) and 16% over the past five days.
The Market Is Enthralled With SMRs Now, But That Could Easily Change
Currently, investors are very bullish on small modular reactors (SMRs) because they believe that SMRs could generate a great deal of revenue and profits by powering data centers. As a result, many of the companies that are looking to build SMRs have gained huge valuations. Nano Nuclear is in this category, as it now has a market capitalization of more than $1 billion — even though it’s not generating any revenue and probably will not have significant sales for at least several years.
History shows that, when the market awards very high valuations to companies due to excitement over their technologies’ potential, the stocks of these firms often follow with a crash. Since 2010, startup solar energy companies, electric vehicle (EV) makers, and (to a lesser extent)) quantum computing firms have all gone through this process.
Based on this general history, it’s reasonable to conclude that SMR stocks could very well also crash in the medium-to-long term.
Nano Nuclear Will Not Likely Generate Meaningful Revenue Anytime Soon
Nano Nuclear’s main, current undertaking involves building a modular “microreactor” at the University of Illinois. But the construction of this facility is not expected to get underway until “mid-to-late 2027.” Consequently, the firm may not start generating meaningful revenue until 2030.
