Last month, the NuScale Power stock experienced a significant drop of 39.5%.
Rewritten Article:
NuScale Power Corporation's shares, often referred to as SMR (-6.60%), plummeted 39.5% in December, according to data from S&P Global Market Intelligence. The small-scale nuclear reactor (SMR) startup witnessing a significant drop likely stemmed from a broader sell-off of growth and artificial intelligence (AI) stocks in December. Additionally, a competitor's announcement might have fueled the selling surge. Over the last year, NuScale Power share prices soared over 800%.
Here are the reasons behind NuScale Power's stock decline in December.
Overdue Correction in a Hot Sector
Any stock associated with nuclear energy was on a roll in 2024, primarily due to growing electricity demand from AI companies as they expand data centers worldwide. Electricity supply concerns range from not keeping pace with ever-rising demand, forcing utilities and AI developers to explore diverse energy sources, including nuclear. Leading tech firms show interest in adopting nuclear energy in the future, sparking a new era for the industry.
NuScale Power Corporation aspires to disrupt the nuclear market with its revolutionary SMR technology. SMR stands for small, modular nuclear reactor, ensuring quicker construction times and lower upfront investments compared to traditional methods. Although the SMR concept is novel, industry experts anticipate gradually replacing existing solutions with this new technology, resulting in massive sector growth in the coming decades. As NuScale Power's shareholders believe in its potential, prices have surged by an impressive 800% over the past year and set a market cap of over $6.1 billion.
The stock's meteoric rise in 2024 may have influenced December's fall, coinciding with growth stock declines in December. However, a competitor's announcement could also have played a role. GE Vernova, an energy generation titan, recently revealed plans to invest heavily in SMR technology, triggering NuScale Power's decline in early December. GE Vernova, with a market cap close to $100 billion, would be a formidable competitor in the SMR race.
Investing in Nuclear Energy Stocks: Is It Wise?
The nuclear energy industry is undergoing a renaissance era just as electricity demand skyrockets. As long as electronic power demand persists, nuclear energy projects will attract investments.
While this suggests NuScale Power stock's appetite for success, it's not a guarantee. NuScale Power, with a $6.1 billion market cap and negligible quarterly revenue, burns over $150 million in free cash flow annually. Its sole means of staying afloat is raising funds through common stock sales, adversely affecting trim long-term shareholders' returns. NuScale faces years of substantial financial losses, obliging it to continuously raise funding, dilute shareholders, and perhaps erode investor value. It's best to exercise caution and skip buying dips on this promising nuclear energy stock favorite, despite its impressive 2024 performance.
Enrichment Data Integration:
NuScale Power Corporation has earned its position as a pioneer in small-scale nuclear reactor technology with US Nuclear Regulatory Commission design certification. This positioning places it as a prime candidate for powering AI-driven data centers, aligning well with the massive investment in SMRs by major tech players like Amazon, Microsoft, and Google.
Competition exists within the SMR market, as NuScale faces off with other firms such as GE Vernova, which aims to promote its BWRX-300 SMR project via a $800 million US Department of Energy funding quest, aiming for deployment in 2033.
The SMR market is seeing significant advancements in 2025, driven by escalating electricity demand, the need to power electrified infrastructure, and the push for reliable, carbon-free energy sources. SMRs, due to their reliability, carbon-free power, safety features, and faster build times, are becoming popular alternatives to traditional nuclear power plants.
With global players like the US, UK, and France in the mix, the SMR market expects a healthy growth trajectory due to strides in deployment and technology development over the coming years.
- Despite NuScale Power Corporation's SMR stocks (SMR) experiencing a significant drop of 39.5% in December, due to wider sell-offs of growth and AI stocks and a potential competitor announcement, investors might still find it wise to consider investing in nuclear energy stocks due to the industry's renaissance period.
- The likely reasons for NuScale Power's stock decrease in December could be attributed to an overdue correction in a hot sector, especially considering the meteoric rise in its share prices over the past year, as well as the announcement of GE Vernova's heavy investment in SMR technology.
- Investors considering buying NuScale Power stocks at a dip should stay cautious due to the company's substantial financial losses, requiring continuous fundraising, dilution of shareholders, and the potential erosion of investor value.
- Given that the nuclear energy industry is experiencing a new era with increasing electricity demand, and major tech players like Amazon, Microsoft, and Google investing in SMR technology, NuScale Power's likely move to power AI-driven data centers with its SMR technology could provide substantial sector growth in the upcoming decades, making it an appealing investment opportunity.
