Oklo is Down 63% From Its Peak. Here's Why It Could Fall Further.

Oklo (NYSE: OKLO) has taken shareholders on a roller-coaster ride, with the stock trading as low as $5 per share in September 2024 and as high as $193 per share last October. The advanced nuclear energy company has benefited from positive news flow around nuclear investments in the United States.

Today, the stock is trading 63% below its all-time high and could be vulnerable to further declines. Here's what investors need to know about Oklo before buying.

Oklo's big deal with Meta Platforms

Oklo has been making waves. The company develops advanced fission power plants called Aurora powerhouses. Its reactors can run on recycled fuel, with the Aurora powerhouse designed to operate for up to 10 years before refueling. These use metal-fueled fast reactor technology based on the Experimental Breeder Reactor-II. This reactor operated for 30 years at Argonne National Laboratory (now the Idaho National Laboratory) until it was shut down in 1994 when national research priorities shifted.

Image source: Getty Images.

Nuclear energy is an appealing power source for technology companies for a few reasons. That's because it doesn't produce carbon emissions and burns more cleanly, while also providing reliable base-load power that data centers want. The problem is that it takes a long time to build a nuclear power plant. This is where Oklo's technology aims to bridge the gap by developing small, factory-built, advanced reactors designed for quick deployment and simplified on-site construction.

In January, the company came to an agreement with Meta Platforms to develop a 1.2 GW power campus. The project is planned for Ohio and supports the deployment of its Aurora powerhouses. The agreement includes Meta prepaying for power, providing Oklo with upfront capital to advance the project, with the first phase targeted for 2030 and scaling up to the full 1.2 GW capacity by 2034.

What to expect from Oklo in the next few years

Oklo is making moves, but investing in the stock today comes with risks. Its first commercial operating Aurora powerhouse at the Idaho National Laboratory (INL) isn't set to operate until late 2027 or early 2028.

Before that happens, it still has to obtain approval from the Nuclear Regulatory Commission and Department of Energy, construct its facility, and establish a fuel supply chain. The company is making progress; late last year, it broke ground on its Aurora powerhouse at INL and is building a fuel fabrication facility on site.

It'll be a few years before it's operating, and even longer before it generates a profit. The company has $1.18 billion in available cash and securities, but will likely need to raise additional capital to complete nuclear reactor deployments and expand its fuel-cycle facilities, which creates dilution risk for shareholders.

Oklo is a high flyer and benefits from positive news around the nuclear energy industry, but it will continue to see large price swings, especially as it establishes itself. For now, it remains a high-risk company in the nuclear industry and is best left for aggressive investors with a strong appetite for risk.

Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.