What's Happening?
NuScale Power Corp., a developer of small modular reactor (SMR) technology, has experienced significant stock volatility in 2025. The company's stock soared above $57 earlier this year but has since dropped
to approximately $21.39, marking a 63% decline from its 52-week high. Despite this, Wall Street analysts have set 12-month price targets between $36 and $38, suggesting potential upside. NuScale's flagship product, the NuScale Power Module, is a 77-megawatt electric pressurized water reactor. The company is currently pre-commercial, with no operating plants and relies heavily on equity issuance and government cost-sharing for funding. Recent developments include a partnership with ENTRA1 Energy and the Tennessee Valley Authority (TVA) to explore deploying up to 6 gigawatts of SMR capacity, although this remains a memorandum of understanding rather than a binding contract.
Why It's Important?
The developments at NuScale Power are significant as they highlight the challenges and opportunities in the nuclear energy sector, particularly in the context of AI-driven energy demand. The company's ability to secure contracts and convert memorandums of understanding into binding agreements will be crucial for its future success. The U.S. Department of Energy's recent announcement of up to $800 million in funding for SMRs underscores the growing interest in nuclear energy as a clean power source. However, NuScale's reliance on equity markets for funding and the potential for shareholder dilution pose risks. The company's strategic position as the only U.S. SMR developer with an NRC-certified design gives it a competitive edge, but the lack of binding contracts and the high costs associated with SMR deployment remain significant hurdles.
What's Next?
NuScale has scheduled a special shareholder meeting for December 16, 2025, to vote on increasing its authorized capital stock, which could provide more financial flexibility but also lead to shareholder dilution. The company aims to secure binding power purchase agreements or construction contracts tied to its partnership with TVA and ENTRA1. Progress on the Romanian Doicești SMR project, which is currently in the design and financing stage, will be closely watched. Additionally, further support from the U.S. Department of Energy or international partners could improve project economics and reduce financing risks. Investors will also monitor NuScale's cash burn rate and the impact of any new equity issuance on its stock price.
