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Nuscale Power Corp(SMR-N)

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Why NuScale Power Stock Popped on Friday

Motley Fool - Fri Oct 6, 2023

What happened

Shares of NuScale Power (NYSE: SMR), a start-up manufacturer of small modular nuclear reactors (hence the ticker SMR), blew up in a good way early on Friday morning, with its shares rocketing 19.2% through 10 a.m. ET.

The company has just announced that privately owned Standard Power will develop two small modular reactors to provide power to its data center company customers. Located in Ohio and Pennsylvania, the SMRs are rated to produce approximately 2 GW combined.

So what

Standard Power explained its choice of NuScale as a partner by pointing out that NuScale is "the only technology provider and producer of SMRs that has obtained U.S. regulatory approval" for its nuclear power plant design.

Standard Power says SMRs present an effective solution to the problem of "legacy baseload grid capacity going offline with a lack of new sustainable baseload" options, "especially as power demand for artificial intelligence (AI)-computing and data centers is growing." NuScale partner ENTRA1 Energy will assist with developing the project to build NuScale's reactors.

Now what

This all sounds like very good news for NuScale, which generated less than $12 million in sales last year (although that was up significantly from less than $3 million the year before). What's unclear, however, is exactly how much this Standard Power contract will be worth to NuScale.

None of the companies involved disclosed a price for the project, or even a time for completion. This being the case, it's hard to say precisely what effect the contract will have on NuScale's bottom line -- or how long it will take to show up on that bottom line.

At the very least, however, this contract triples the number of SMRs that NuScale is known to be building for customers. For today, that news alone seems good enough for investors to roll the dice on this stock.

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

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