Why NuScale Energy Stock Dropped Today

Actions of NuScale Power (SMR 0.25%) was down 3.2% by 11 a.m. ET Thursday on disconcerting news from the U.K. According to World Nuclear News (WNN), the British government has just narrowed the list of companies competing to start building small modular nuclear reactors (SMRs) in the UK to four names.

NuScale is not one of them.

SMR in the UK

According to WNN, the list of companies competing for this program was originally six, but two companies were cut: NuScale and EDF of France. General Electric subsidiary GE Hitachi Nuclear Energy, Rolls-Royce– owned by Rolls-Royce SMR and privately owned Holtec and Westinghouse all made variants with reactor designs based on existing technology married to “modular manufacturing techniques”.

Britain plans to further narrow its list to two or perhaps three companies that will win co-financing contracts to complete their projects and obtain permits. The government will then make the final decision to continue construction of the power plant in 2029.

Is NuScale Power Stock a Sell?

What does this mean for investors? In a way, that’s good news, because two publicly traded stocks remain afloat — GE and Rolls-Royce — giving investors two ways to invest in small modular nuclear reactors that are becoming a real thing.

The bad news is that the closest company to a pure play in this new technology, NuScale Power, is now no longer an option in the UK. In addition, the UK’s decision to pass on NuScale’s technology may give US regulators something to think about as well. All things considered, I’d say this is bad news for NuScale stock.

The other the bad news is that the remaining options, Rolls-Royce and GE, are valued at $60 billion and $200 billion, respectively. While nuclear might one day become a bigger part of their businesses, it will be a long time before either company gets big enough in nuclear to move the needle on their revenues or earnings, or for investors to to see them primarily as stockpiles of nuclear energy. .

Investors looking for pure nuclear plays should probably look elsewhere.