Why Did Oklo Stock Plummet 18.3% This Week?

Key Points

• Goldman Sachs initiated coverage this week, setting a neutral rating.

• Several large sales from key insiders also appeared to concern some investors.

• 10 stocks we like better than Oklo ›

Shares of Oklo (NYSE: OKLO) fell this week, finishing down 18.3%. The drop comes as the S&P 500 and the Nasdaq-100 Composite lost 0.3% and 0.5%, respectively.

The advanced reactor developer's stock is getting battered this week after a research note from Goldman Sachs cautioned investors not to get ahead of themselves. The company also saw significant insider selling this week.

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Goldman initiates coverage of Oklo stock

Amid significant investor enthusiasm for Oklo and nuclear stocks in general, Goldman Sachs analysts issued their first research note for Oklo on Wednesday, giving it a neutral rating. Goldman said that the company's business strategy needs "de-risking" and that the stock's valuation has outpaced reality.

Along with the neutral rating, the bank set a price target of $117 per share. That represented a significant downside when the note was released, but since the stock has fallen more than 23% since Wednesday's opening bell, that target is now represents an upside.

Image source: Getty Images.

The lukewarm note from Goldman comes as several high-profile insiders unload a fairly large amount of stock. The CEO and CFO alone sold more than a combined $12 million worth of shares.

Oklo's valuation is a concern

I have to agree with the Goldman analysis. I think investors are getting ahead of themselves. The drop this week makes the stock more attractive, but the company's more than $16 billion market cap is still high, given that its technology is unproven and it is still pre-revenue.

Still, for investors with a higher risk tolerance, Oklo can be a solid pick. Nuclear energy is having a renaissance of sorts, and the opportunity for Oklo is massive. Just know it's a long road to profitability.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.