Is Oklo the Next Trillion-Dollar Stock?

No, Oklo probably won’t become a trillion-dollar company

I won’t mince words: I doubt Oklo will ever have 12 zeros after its name. That doesn’t make it a bad stock; it just means there will be a limit to its growth. That limit, I think, will be determined by how profitably Oklo can sell power.

The gist of Oklo’s business is this: Sell electricity generated from small nuclear reactors. More precisely, Oklo is developing sodium-cooled fast reactors that use metallic nuclear fuel and are engineered to operate for a decade or longer without refueling. It has an insanely talented executive team — including CEO Jacob DeWitte, who holds a Ph.D. in nuclear engineering from MIT — as well as agreements with companies leading the way in developing AI infrastructure.

Image source: Oklo.

Small nuclear reactors, like Oklo’s Aurora, have a smaller footprint and theoretically will take less time to build. They can also be mass-produced in factories, which should make them cheaper to build.

Whether Oklo’s Aurora reactors will actually be cheaper remains to be seen, but even if they are cheaper to build, there’s another lingering question: How much will it cost Oklo to operate them?

A preprint, titled “The consequences of high SMR costs in electricity markets,” suggests the answer might not be encouraging.

This study, which hasn’t undergone peer review, found that many small reactor developers would need to charge unusually high electricity prices to earn a profit. The reason? Fuel and operating costs will simply be too high.

The study puts it bluntly: “SMRs are uneconomical primarily because investment cost reductions are offset by increased marginal costs.” In other words, a reactor that is relatively inexpensive to build can still be very expensive to operate. So expensive, in fact, that some customers might not be willing to pay the prices needed to make Oklo profitable.

Of course, high electricity prices won’t scare away every customer. Indeed, some might be willing to pay a premium for the kind of around-the-clock, clean power that Oklo hopes to provide. In fact, the study even mentioned Oklo’s older 15-megawatt (MW) Aurora model as one of the better-performing SMRs, suggesting its economics could be better than those of some competitors.

Still, that’s hardly a guarantee of profitability, at least not at the level a trillion-dollar company would need to justify its valuation. Add to that all the other uncertainties — building reactors, operating them safely, selling power to customers — and the question of a trillion dollars pales in comparison to a more pressing one: Can it actually build a successful business in the first place?

For now, Oklo remains a speculative growth stock with no guarantee of success. Only aggressive investors who can stomach volatility should consider opening a small position.