Should You Buy NuScale Power Stock While It's Below $24?

NuScale Power, developer of a small modular reactor (SMR), remains pre-revenue on product sales despite trading below $24 (52-week high $53, low ~$13). Potential customers include a Romanian utility considering up to six SMRs with a final decision pushed to late 2026/early 2027 and U.S. interest from the TVA and ENTRA1, while the company is generating limited consulting revenue tied to assessments. A material near-term overhang is Fluor’s staged exit (selling shares through 2026), and the lack of a first official SMR sale keeps valuation driven by sentiment rather than demonstrated contracts or cashflow.

Analysis

Market structure: NuScale (SMR) is a potential winner if its SMR design clears regulatory and first-of-a-kind (FOAK) commercial sale, because factory-built modular units can undercut conventional large reactors on schedule and potentially 20–40% lower effective capex/MW over lifecycle once scaled. Near-term winners are incumbent utilities with balance-sheet access (e.g., TVA) and EPC firms that capture engineering fees; losers are niche developers of large bespoke plants and pure-play early-stage investors who priced in near-term commercialization. Cross-asset: durable delays lift risk premia in utility and project finance debt (10–30 bps widening for FOAK projects), modestly lift uranium futures demand (single-digit %), and sustain equity volatility — SMR equity will trade like a binary tech/biotech story, not a utility.

Risk assessment: Tail risks include NRC certification failure, a FOAK operational incident, or Fluor (FLR) share liquidation depressing sentiment — each could halve SMR equity value in a week. Time horizons: immediate (days–months) dominated by Fluor share sales and newsflow; medium (12–24 months) by Romania/TVA offtake decisions with potential binding contracts; long (3–7 years) by manufacturing scale and repeat orders. Hidden dependencies: customer financing, Fluor as contractor, supply-chain for forgings; catalysts to re-rate include a signed purchase agreement, DOE/NRC milestones, or third-party financing commitments.

Trade implications: Direct tactical play is asymmetric option exposure: buy limited-cost long-dated calls (e.g., Jan 2028) on SMR sized 1–2% NAV to capture >100% upside if Romania/TVA contracts materialize; complement with 6–12 month puts to hedge post-Fluor selling risk if taking equity. Pair trade: short SMR vs long large regulated utility ETF or stock (utilities with nuclear-friendly policy) to hedge macro power demand; size short SMR at 2–3% NAV and long utilities 3–4% NAV. Capitalize on volatility: sell near-term covered calls only after establishing long equity to finance long-dated calls. Entry/exit rules: buy calls before late-2026 Romania decision; reduce exposure if no binding contract by Q1 2027 or if SMR >$30 on >1.5x ADV, stop-loss 20% on short-dated positions.

Contrarian angles: The market underweights niche, captive demand (data centers, mining, remote industrials) that can accept FOAK pricing and accelerate repeat orders; Fluor’s public selling may be front-running rather than signal of technology failure — strategic buyers could accumulate once shares clear. Reaction may be overdone: absence of a contract today is priced as binary failure, but a single firm PPA/turnkey order would likely re-rate SMR >100% within 6–12 months. Historical parallel: early-stage renewables and inverter manufacturers suffered multi-year undervaluation before rapid scale; the unintended consequence of Fluor selling could be a consolidation opportunity where strategic industrials buy at depressed prices.

Key Decisions for Investors

• Establish a 1–2% NAV asymmetric upside position by buying SMR Jan 2028 calls (strike ~30) as a lottery ticket; cap loss to premium paid and re-evaluate after Romania final decision (expected late-2026/early-2027).
• Hedge short-term downside by purchasing 6–12 month puts on SMR (strike ~20) sized to cover 50–75% of the long-call notional while Fluor completes its planned share exits through 2026.
• Implement a relative-value pair: short SMR (2–3% NAV) vs long regulated-utility exposure (3–4% NAV, via a utility ETF or TVA-exposed names) to capture idiosyncratic negative repricing while retaining sector upside from electrification.
• Avoid establishing plain-vanilla long SMR equity >3% NAV until a binding commercial contract or NRC/DOE milestone is announced; if a contract is signed, add to long equity up to 3–5% NAV with a 20% stop-loss.
• Reallocate 2–4% NAV from early-stage clean-tech holdings into nuclear supply-chain/EPC exposure (e.g., FLR sized 1–2% NAV) to capture engineering fee upside if FOAK projects proceed, but monitor FLR’s share-sale schedule through 2026 for execution risk.