Cathie Wood Just Ditched Oklo Stock. Should You?

OpenAI’s spending spree continues unabated, and many have already witnessed share price surges across the power sector. One of the biggest winners of this trend has been Oklo (OKLO), whose shares are up over 550% this year alone. In the last few days, Cathie Wood’s ARK Autonomous Tech ETF (ARKQ) sold 53,353 shares of the company’s stock, and this has spooked some investors. The stock price has lost more than one-fifth of its value in a matter of two weeks, which shows how fragile the company is.

As exciting as the nuclear energy opportunity is, Oklo still needs to deliver financially, and that’s where most people are doubting it. Oklo is a pre-revenue company that won’t make anything in the foreseeable future. The company has to deliver on a tight timeline, scaling at a level never seen before. What it has going its way is cash availability in the form of government support and hyperscalers who would want to see it succeed. Other than that, things on the financial and regulatory front are a challenge. The company may continue to raise capital, which would bring the stock further down and add to the volatility.

Oklo is a clean energy provider through its advanced fission power plants. It converts nuclear waste into fuel for the reactors in its own power plants. It is headquartered in Santa Clara, California.

OKLO stock is up over 550% already this year, significantly outperforming the benchmark S&P 500 Index’s ($SPX) price return of under 15%. On a relative basis, the stock has delivered 36x higher returns compared to the benchmark index, and in the process touched its all-time high of $194 just 13 days back. The recent news of collaboration with Newcleo sent the stock skyrocketing, but since then it has undergone a major correction, currently trading at a 29% discount to that peak. Such an upward spike is solely attributable to an unparalleled enthusiasm from its oversized retail investor base, and there aren’t any sound fundamentals to back up this nuclear energy player.

Since Oklo has not yet posted any revenues, it is difficult to perform a thorough analysis based on financial multiples, except for the book value. On a trailing twelve-month (TTM) basis, the stock trades at a price-to-book (P/B) multiple of 26.4x relative to a sector median of 1.97x, representing a humongous 1,241% premium. On a forward basis, OKLO is currently valued at 24.9x its book value, which is 1,229% higher than the sector median of 1.88x.

Oklo released their second quarter results on Aug. 11, reporting a quarterly loss of $28 million. This translated into GAAP earnings per share (EPS) of -$0.18, missing the consensus estimates by 28%. However, this was better compared to the -$0.27 EPS reported during the second quarter in 2024. The company ended the quarter with a strong cash & marketable securities balance of $683 million.

The management is pushing to begin commercial operations by 2028 and anticipates recurring revenues in the future given the company’s ambitions to execute a build, own, and operate model. On the earnings call, management was confident about how the federal government was helping in the rapid deployment of advanced nuclear technologies. Since the government itself is interested in expediting regulation and deployment, especially at key locations of national security interest, it is doing all it can in terms of policymaking. The leadership also highlighted its technological advancements on the earnings call, despite the focus being on the regulatory front for now.

There are just 18 analysts on Wall Street who cover OKLO stock. Eight of them are extremely bullish on the stock with a “Strong Buy” rating, and one is less bullish with a “Moderate Buy.” Seven “Hold” and two “Strong Sell” ratings suggest there are enough analysts who think the stock has run its course. This is reflected in the stock price as well, with OKLO currently trading nearly 40% above the mean target price of $93.07, though still comfortably below the highest price target of $175, a mark it touched earlier this month.

On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com