Oklo stock has slumped this year as concerns about the small modular reactor (SMR) industry continues. It has fallen to $41.36, down by nearly 80% from its highest point last year, with its market capitalization falling from over $24 billion to $7.6 billion. This retreat may continue as concerns about the industry remains and short interest jumps.
Concerns about Oklo’s business remain
Oklo is a Sam Altman-backed company building technology that could disrupt the power industry. It is one of the biggest players in the small modular reactor industry, which some analysts believe will play a crucial role in the power sector in the future.
The company has three business lines: power, fuel, and isotopes. Its power business creates demand, while its fuel enables deployment. Its isotopes business, on the other hand, expands value through nuclear capabilities.
If the SMR industry takes off, Oklo will be one of the top names to benefit. This will be possible as the US policy is supportive of the technology, with the Department of Energy (DoE) encouraging the sector. It has already selected five states as potential hosts for Nuclear Lifecycle Innovation Campuses that will integrate fuel fabrication, enrichment, and fabrication.
For now, however, the main risk that Oklo faces is that it is still in the development phase, and it is unclear whether it will continue growing. Being in the pre-revenue phase, the company continues to burn substantial sums of money.
Its recent results showed that its year-to-date loss jumped to $81.6 million. Its loss from operations was $124.2 million, which was offset by its net interest and dividend income of $44.5 million. This loss-making will continue in the foreseeable future until it becomes profitable.
At the same time, the company continues to dilute its shareholders. It ended the last quarter with $3 billion in cash and marketable securities. This cash increased by $1.9 billion after it announced two ATM offerings.
These ATMs have fueled a surge in outstanding shares, which have moved from 51.5 million in 2022 to 185 million today. This is another reason why its short interest rate has jumped to 16.3%, with the FT noting that short sellers in SMR companies have made billions of dollars.
Most analysts covering the company have lowered their targets, with Citigroup cutting from $76 to $57. Truist cut it from $55 to $51, while Canaccord Genuity slashed it from $125 to $100.
Oklo stock technical analysis
Oklo share price chart | Source: TradingView
The weekly chart shows that the Oklo stock has retreated sharply in the past few months, falling from $194 to $41. It has already moved below the important support level of $45.2, its lowest level in March this year. Moving below that level invalidated the double bottom pattern.
The stock has now moved slightly below the 78.6% Fibonacci Retracement level, a sign that short sellers remain in control. It has also slumped below all moving averages.
Therefore, the stock will likely continue falling in the near future, potentially to the psychological level of $30.
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