Company Profile
Introduction
NuScale (ticker: SMR) is an American manufacturer that mainly designs and sells small modular reactors (SMRs).
For an introduction to SMR, please see my post of “The current progress of nuclear fusion, and relevant companies“
Initial Public Offering
NuScale became a public company on May 2, 2022, trading on the NYSE under the symbol SMR.
Full of future potential
US government support
In 2024, major US companies are investing heavily in nuclear energy projects, and NuScale Power will receive a lot of government funding from Biden’s Infrastructure Act, which has driven the company’s stock price up.
AI power consumption soars
Due to the soaring power consumption of artificial intelligence data centers, the demand for power generation is imminent around the world. SMR, which can provide huge power in the short term with only a small power plant construction, happens to be the hot star in the current power generation industry. For details, please refer to my post of “Nuclear power stocks spike as AI ignited electricity demand“
Endorsement by technology giants
Amazon, Microsoft and Meta have significantly increased their investment in cheap and efficient energy such as SMR to cope with the electricity required for the growing cloud infrastructure operations.
Advantages over traditional nuclear power plants
NuScale’s SMR can be installed in a small container that is only 9 feet wide and 65 feet high, and the modular parts are all prefabricated so they can be delivered and assembled on site. This flexibility will allow nuclear companies to locate them in locations not suitable for building large nuclear reactors.
Certified by the Nuclear Energy Council
The only approved SMR manufacturer
NuScale is the only SMR manufacturer to have received the Standard Design Approval (SDA) certification from the U.S. Nuclear Regulatory Commission. However, the certification only covers reactors that can generate up to 50 megawatts (MW) of electricity. For a fleet of reactors to be more cost-effective than coal, each reactor must produce at least 77 megawatts of electricity.
Larger designs coming
NuScale expects the long-awaited review of its 77-MW module by the U.S. Nuclear Regulatory Commission to be completed by mid-2025. During its fourth-quarter conference call, CEO John Hopkins predicted that the approval would allow it to serve “a broader customer base while achieving greater economic efficiencies.” This will also widen the company’s moat against potential competitors.
The company’s operations
Improved significantly over the past year
A variety of factors have driven NuScale’s stock price back up over the past year or so. It signed a new supply agreement with South Korea’s Doosan Energy to obtain a stable supply of SMR components, the U.S. Department of Energy (DOE) provided it with up to $900 million in cost-sharing funds to develop SMRs, and Amazon unveiled a plan to support the development of more SMRs.
NuScale also continues to move forward with its 462-MW power plant project for RoPower in Romania as a subcontractor for its largest investor, Fluor (NYSE: FLR). The first phase of the front-end engineering design (FEED) contract for this project was signed in December 2022, and the second phase contract was signed in July last year.
NuScale’s growing business in Romania significantly boosted its revenue over the past year, offsetting the impact of the closure of its project in Idaho. As a result, its revenue surges 62% in 2024 to $37 million.
Outlook
By 2025, analysts on average expect NuScale’s revenue to more than double to $74 million and its net loss to narrow to $84 million. They expect revenue to nearly triple to $219 million by 2026, and net losses to narrow further to $76 million.
That relatively optimistic outlook is likely based on several assumptions: that the U.S. federal Nuclear Regulatory Commission will approve its 77-MW design; that NuScale will get some Energy Department funding; that it will expand its operations in Romania; and that the company will win more U.S. contracts as tech giants like Amazon, Microsoft and Meta step up investments in cheap, efficient energy sources like SMRs to power their growing cloud infrastructure operations.
Don’t expect profits anytime soon
NuScale won’t be profitable anytime soon. But with $447 million in cash, cash equivalents, and short-term investments on its books at the end of 2024, the company can afford to take more losses as it expands its business over the next few years.
Capital market Performance
Stock price performance
In 2024 alone, the company’s stock price rose by 480%. The company’s stock price also rose 190% in the past year to the end of February 2025.
The investment is very risky
NuScale’s enterprise value of $2.1 billion, or 10 times next year’s sales, doesn’t seem too expensive. However, over the past two years, the company has increased its outstanding shares by 83% through secondary offerings and stock-based compensation. In the last 12 months, insiders at the company sold 16 times as many shares as they bought. Continued dilution and cool insider sentiment suggest the stock’s upside potential may remain limited until NuScale stabilizes its domestic operations.
NuScale’s stock might be worth buying as a speculative play on the emerging SMR market, but I wouldn’t endorse the stock just yet. The company still faces many unpredictable challenges, and its stock price could easily drop in half and then double again.
Related articles
- “SMR company NuScale stock price nearly doubled in the past year“
- “The current progress of nuclear fusion, and relevant companies“
- “Nuclear power stocks spike as AI ignited electricity demand“
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