Wednesday, 10 July 2024

Why NuScale Power Stock Dropped 8% on Tuesday

by BD Banks

Why NuScale Power Stock Dropped 8% on Tuesday

Shares of NuScale Power (NYSE: SMR) slid 8.1% through 11 a.m. ET on Tuesday on some disconcerting news out of China. NuScale bills itself as the leader in nuclear technology for small modular reactors (SMRs). And, according to management, its SMR is the only one to be certified by the U.S. Nuclear Regulatory Commission.

That’s fine as long as nuclear fission, used in SMRs, remains the cutting-edge technology. But as The Wall Street Journal reported this morning, there’s a new technology on the horizon, nuclear fusion, and China is taking the lead in the race to commercialize it.

Will China make NuScale obsolete?

According to the Journal, China went from having “almost nothing” of a nuclear fusion program 10 years ago to arguably leading the U.S. today. Nuclear fusion has always seemed to be just a decade away (it was 10 years ago that I first wrote about how Lockheed Martin thought it was about to solve the fusion puzzle).

Image source: Getty Images.

But China is now racing to make it a reality. It is investing twice as much money and has 10 times as many PhDs in fusion science and engineering as the U.S., the Journal reports.

If it succeeds, cheap energy generated from nuclear fusion could potentially make nuclear fission reactors of the kind that NuScale is developing obsolete.

Is NuScale Power stock a sell?

It’s possible that China will not succeed. Scientists have been working on the fusion problem since the 1950s without success, which suggests that China also will fail — and that cheap nuclear fusion energy is a pipe dream.

Still, there’s a chance that fusion will work. And with China and the U.S. competing to make it happen, NuScale is now in a race to turn profitable before its technology becomes obsolete.

With analysts forecasting NuScale will remain unprofitable well into the 2030s, time is not on its side.

Should you invest $1,000 in NuScale Power right now?

Before you buy stock in NuScale Power, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NuScale Power wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $785,556!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of July 8, 2024

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin and NuScale Power. The Motley Fool has a disclosure policy.