If You're Still Holding NuScale, Here's 1 Catalyst That Might Make You Sell

NuScale Power (NYSE: SMR) is a company that specializes in constructing small modular reactor (SMR) nuclear facilities. SMRs are compact versions of traditional nuclear power plants, designed to be more affordable and quicker to build than conventional plants. Currently, NuScale is the only company in the United States authorized to build an SMR system.

While conventional nuclear plants can be more cost-effective per megawatt, SMRs offer advantages such as faster construction times and lower initial costs due to their modular design, which allows for potential future scaling.

The appeal of SMRs lies in their suitability for artificial intelligence (AI) companies, which require substantial energy supply rapidly. Despite these advantages, NuScale stock has experienced a significant decline of approximately 75% over the past year, despite the promising growth potential of SMRs. There are currently 80 SMR projects worldwide in various stages of development, but only two have ever been successfully built.

Historically, more SMR projects have encountered failures than successes. Recently, NuScale's largest customer pulled out of a deal due to rising costs, which highlights the inherent risks and financial uncertainties in SMR projects.

Despite these challenges, NuScale is set to begin construction on the world's largest SMR facility. However, this development is contingent upon securing a binding financial agreement with a customer, which has not yet been finalized. NuScale's CFO indicated that such an agreement could be reached by the end of 2026, although it may be extended into 2027.

The absence of a binding contract means that if the customer decides to back out at any point, the entire investment thesis for NuScale's stock could be jeopardized. As a result, potential investors must carefully consider the risks before deciding whether to hold or sell NuScale shares. The Motley Fool Stock Advisor analyst team, which did not recommend NuScale Power in its latest top 10 list, highlighted that investing in certain stocks could yield substantial returns, such as a $1,000 investment in Netflix or Nvidia turning into $417,413 and $1,341,294, respectively.