Recent Stock Slide and Context
NuScale Power Corporation (NYSE: SMR) – an innovative developer of small modular reactors – has seen its stock tumble about 10% recently, raising questions for investors. The drop came amid a sharp fourth-quarter selloff that erased a big chunk of this year’s gains. Notably, the stock had skyrocketed earlier in 2025 (up over 300% from its $10 SPAC debut in mid-2022) on optimism around government-backed nuclear initiatives ([1]). By late 2025, however, shares were under pressure from dilution fears and insider selling. On December 22, B. Riley Securities slashed its price target on SMR from $38 to $24 (still rating it a Buy), citing potential share dilution after shareholders approved doubling the authorized Class A share count from 332 million to 662 million ([2]). This heavier share overhang, alongside other concerns, drove the stock down ~10% in late December ([2]). Year-to-date, SMR remains roughly doubled, but it is down over 50% from its peak – prompting investors to ask if the recent slide is a buying opportunity or a warning sign.
Dividend Policy, Cash Flows, and Yield
SMR does not pay a dividend, nor has it paid any since going public. This isn’t surprising: NuScale is still a pre-commercial company with no positive earnings or FFO/AFFO. In fact, the company continues to incur significant losses and negative cash flows, accumulating a $682 million deficit to date ([3]). Free cash flow was deeply negative (–$150 million in 2022, widening to –$169 million on a TTM basis by late 2023) ([4]), reflecting heavy R&D and start-up costs. Given this financial profile, NuScale has no capacity to distribute cash to shareholders – its “yield” is effectively 0%, and management has indicated reinvestment in growth over any near-term dividends. In other words, dividend-focused metrics like AFFO or coverage ratios don’t apply here, as all available capital is being used to fund development and future projects.
Leverage, Liquidity and Debt Coverage
One noteworthy aspect of NuScale’s balance sheet is the lack of debt. The company carries no interest-bearing debt on its books ([3]), having funded its operations primarily through equity raises, government grants, and strategic partnerships. Most recently, NuScale bolstered its coffers by selling ~17.8 million new shares via “at-the-market” offerings, raising $562 million net in the first nine months of 2025 ([3]) ([3]). As of September 30, 2025, the company held about $692 million in cash and short-term investments and remained debt-free ([3]). This liquidity provides some cushion – management believes it has sufficient cash for “the next 12 months and beyond” ([3]) – but it’s worth noting that operating cash burn has accelerated. In the first three quarters of 2025 alone, operating activities consumed $256 million in cash ([3]), largely due to hefty outlays tied to a new partnership agreement (more on this below). Essentially, NuScale’s ability to cover its costs hinges on external capital infusions, since current revenues don’t come close to covering expenses. With no interest expense or debt maturities to worry about, interest coverage isn’t an issue – but cash coverage of its business plan is a key concern. The company has repeatedly tapped equity markets to stay afloat, and the recent expansion of authorized shares suggests further issuance is anticipated ([2]). This means dilution risk for current shareholders remains high.
Partnership Milestone Payouts and Commitments
A significant recent cash outflow – and a source of investor concern – is NuScale’s Partnership Milestones Agreement (PMA) with ENTRA1 Energy. ENTRA1 is NuScale’s exclusive global commercialization partner, formed with Habboush Group to develop and finance SMR projects. Under an August 2025 agreement, NuScale committed a “Partnership Contribution” of $35–$55 million per NuScale Power Module to be deployed in ENTRA1-led projects ([5]) ([5]). In practice, this means NuScale helps fund a portion of the reactor cost for initial projects – a strategy to jump-start adoption. These contributions are disbursed in tranches when key milestones are hit: for example, 15% upon signing an MoU or LOI for a new plant, 35% upon a binding power purchase or offtake agreement, and the remaining 50% upon final deployment stages ([5]). The rationale is that such vendor “skin in the game” was always part of NuScale’s pricing model to attract customers ([5]). However, the cash impact is considerable. In the first nine months of 2025, NuScale paid $148.5 million to ENTRA1 under this partnership ([3]) – effectively subsidizing future projects in advance. This helped boost Q3 revenue (via milestone revenues recognized ([2])), but it also dramatically increased operating cash usage ([3]). Investors are wary that such pay-outs, while strategically important, add to near-term cash burn and heighten the need for external financing. It’s a delicate balance: management is betting these early contributions will lead to lucrative reactor orders down the line, but in the meantime they pressure liquidity.
Valuation and Comparables
Traditional valuation multiples are difficult to apply to NuScale. The company’s revenues are minimal – only about $30 million for the first nine months of 2025 ([3]) – and it remains far from profitability. Any price/earnings or price/FFO ratio is meaningless (SMR posts net losses), and even price-to-sales is astronomical (on an annualized ~$40 million revenue run-rate, SMR’s market capitalization is well into the multiple billions, implying a P/S well over 100×). Essentially, the market has been valuing NuScale on future potential rather than current fundamentals. Earlier this year, bullish sentiment around advanced nuclear drove SMR stock to lofty heights. In fact, Bank of America warned in late September that NuScale’s valuation had become “unrealistic,” implying deployment far above even management’s own projections ([6]). At that time, BofA estimated the stock was pricing in ~34.7 GW of NuScale reactor capacity by 2040 – nearly double the company’s base-case forecast – and traded around 11× enterprise value/EBITDA on 2033 estimates ([6]). Such metrics illustrate how much optimism was baked into the shares.
Now, after the recent correction, the valuation has moderated but is still hefty relative to tangible results. Analysts’ price targets reflect this uncertainty. B. Riley’s new $24 target (about 50% above the latest price) suggests upside if dilution fears abate ([2]), whereas Citigroup’s Sell rating and $18.50 target imply further downside ([2]). UBS sits in the middle with a Neutral/$20 view, expressing cautious optimism on NuScale’s technology but concern about “high capital requirements” and the perennial nuclear risk of cost overruns ([2]). It’s worth noting that even after halving from its highs, SMR still commands a multi-billion dollar market cap – extraordinary for a firm with only prototype reactors and early-stage contracts. For comparison, another SMR developer, Oklo (NYSE: OKLO), saw its stock surge in 2025 as well; BofA flagged that both Oklo and NuScale had stretched valuations and promptly downgraded them on September 30 ([7]) ([7]). In response, BofA trimmed its NuScale price objective from $38 to $34 ([7]). In short, the market is struggling to pin down a fair value – it’s a high-stakes bet on NuScale’s future cash flows from reactor sales and services that may only materialize toward the end of this decade.
Leverage and Capital Structure Developments
NuScale’s capital structure deserves special mention given recent changes. The company emerged via a 2022 SPAC merger, which created two classes of stock: Class A shares (publicly traded) and Class B shares (held by legacy insiders, primarily Fluor Corporation, convertible into Class A). This structure has important implications. Fluor Corp. (NYSE: FLR) – NuScale’s largest backer – has been steadily monetizing its stake. In August 2025, Fluor converted 15 million Class B units to Class A shares and sold them for $605 million in net proceeds ([1]). That block sale (at roughly $40 per share) not only marked a peak in SMR’s price, but also introduced a major supply of shares to the market. After the sale, Fluor still held approximately 111 million Class B units (about 39% of NuScale’s equity) ([1]). Fluor indicated it “continues to develop ways” to unlock value from its remaining NuScale holdings ([1]) – potentially via further sales or distribution to Fluor shareholders – which means this large overhang could keep weighing on SMR’s stock ([2]). In fact, Citi pointed to Fluor’s share sell-off plans as a key factor in NuScale’s 52% stock drop during Q4 ([2]). The situation is dynamic: activist investor Starboard Value took a ~5% stake in Fluor in late 2025 ([8]), likely pressuring Fluor to maximize the value of NuScale (possibly through an expedited sale or spin-out). For NuScale investors, the bottom line is that the float may expand significantly, and insider selling could continue, adding volatility.
Meanwhile, the doubling of authorized Class A shares (from 332 million to 662 million) approved by NuScale’s shareholders underscores an expectation of future equity issuance ([2]). Management has relied on periodic ATM stock sales to fund operations, and with only ~20 million unissued shares left under the old authorization as of Q3 ([3]), the company moved to increase its capacity. This doesn’t mean all those shares will hit the market at once, but it does give NuScale a much bigger ammo stash to raise capital when needed – whether for general corporate purposes or potentially financing its share of project costs. It’s a double-edged sword for investors: on one hand, access to cash is vital for NuScale’s survival; on the other, each new share issuance dilutes existing holdings. The market’s reaction – SMR’s 10% slide on the B. Riley dilution warning ([2]) – shows investors are laser-focused on this trade-off.
Project Pipeline, Revenue Outlook, and Coverage
A critical open question is when NuScale will secure firm, revenue-generating contracts for its SMR technology. To date, most “sales” have been engineering services and feasibility studies. For example, NuScale earned modest revenue by supporting a feasibility study for a 6-module plant in Doicesti, Romania ([3]) and through legacy DOE cost-sharing agreements. Its first flagship project – the Carbon Free Power Project (CFPP) with Utah Associated Municipal Power Systems – has faced delays. That project (planned for 6 modules/462 MW in Idaho) saw cost estimates balloon, prompting some municipal participants to withdraw. In 2023, NuScale even suspended a long-lead equipment order for CFPP and later reimbursed $32 million to the DOE/UAMPS as part of settling those commitments ([3]) ([3]). As of late 2025, no final binding EPC contract for CFPP has been signed, a point that keeps investors uneasy ([2]). Citi’s downgrade explicitly cited “persistent uncertainty regarding NuScale’s first binding commercial contract” ([2]). This uncertainty will remain an overhang until either CFPP or another early customer moves from MOU to firm order.
That said, NuScale’s sales pipeline is growing on paper. The partnership with ENTRA1 has yielded a string of high-profile announcements. In September 2025, ENTRA1 signed a landmark agreement with the Tennessee Valley Authority to develop up to 6 GW of new nuclear capacity using NuScale’s SMRs ([9]) – potentially the largest SMR deployment program in U.S. history. And in October, the White House announced a U.S.–Japan strategic framework that would mobilize up to $550 billion for energy infrastructure, with ENTRA1 positioned to receive $25 billion of that to build a fleet of advanced power plants ([9]) ([9]). These moves underscore strong geopolitical and industry support for NuScale’s technology. They could translate into multiple reactor orders in the coming years – if the plans progress. However, investors must recognize the timing mismatch: even under ideal conditions, building nuclear plants is a multi-year process. NuScale itself will likely not see meaningful reactor revenue until late this decade (its standard 77 MW modules are targeting deployment around 2029-2030 for first-of-a-kind units). Until then, reported revenue will consist of small-scale engineering contracts and milestone payments. The coverage of the company’s cash needs during this long lead time is therefore a major focal point. NuScale’s current cash ($692 million) plus expected government support may sustain operations for a couple of years ([3]). But if burn rates remain high (2025’s operating burn is triple the prior year’s ([3])), additional capital raises are almost inevitable before the company reaches self-funding status. In essence, NuScale is in a race to convert its promising MOUs into backlogged orders (and eventually cash-generating projects) before its war chest runs low.
Risks and Red Flags
NuScale Power’s story carries significant risks, and recent events have amplified some red flags:
- Dilution & Financing Risk: The company’s growth is predicated on external financing. Frequent equity issuance is dilutive by nature – and the authorized share increase foreshadows more to come ([2]). If market conditions turn unfavorable (e.g. investor appetite for nuclear startups wanes), NuScale could struggle to raise cash, endangering its development plans. Conversely, raising capital at much lower share prices would compound dilution for current holders.
- Insider Selling Overhang: As discussed, Fluor’s intent to liquidate its stake is a supply overhang that can pressure SMR’s price ([2]). Fluor sold 15 million shares in Q4 and still owns roughly 111 million more ([1]). Any large dispositions – or a sudden distribution of shares to Fluor shareholders – could temporarily flood the market. The involvement of an activist in Fluor suggests this situation is fluid. Investors should watch for news on Fluor’s exit strategy.
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- No Proven Commercial Deployment: Despite years of development, NuScale has no operating reactors in the field yet. Its first commercial unit is still several years away. The first-of-a-kind execution risk is substantial: nuclear plant projects often face delays, regulatory hurdles, and cost overruns. UBS flagged this, noting concerns about “construction delays and cost overruns” endemic to the industry ([2]). Until NuScale actually builds and commissions a plant on schedule, these doubts will linger.
- Customer Contract Uncertainty: NuScale’s agreements so far are mostly non-binding. The Standard Power deal (to deploy NPMs for data center power) that NuScale touted in 2023 became a lightning rod for skeptics. Short-seller Iceberg Research bluntly argued the $37 billion Standard Power contract had “zero chance” of being executed, claiming Standard Power lacks the financial heft for such a project ([4]). They also pointed out Standard’s managing director had a fraud conviction, questioning the customer’s credibility ([10]). NuScale publicly defended the deal’s integrity, but the episode highlights the counterparty risk when partnering with unproven players. More broadly, if initial customers (municipal utilities, datacenter operators, etc.) get cold feet or can’t arrange financing, NuScale’s project pipeline could evaporate or see long delays.
- Regulatory and Technology Risks: While NuScale did achieve a historic NRC design certification for its 50 MW SMR, its current 77 MW design still requires regulatory approval. Any unexpected regulatory setbacks – in safety review, licensing, or operational certification – could derail the timeline. Additionally, NuScale must scale up manufacturing for its NPMs (a complex supply chain endeavor) and ensure performance as promised. Technical issues during testing or early operations would be a serious blow to confidence.
- Competitive Landscape: NuScale is an SMR pioneer, but not alone. Other advanced reactor companies (e.g. Oklo, X-energy, TerraPower) are pursuing different nuclear technologies, some with high-profile backing. It’s possible a competitor’s breakthrough (or a larger incumbent’s SMR offering, such as those by GE Hitachi or Rolls-Royce) could steal some mindshare or contracts if they offer advantages in cost or timeline. NuScale needs to maintain its lead and capitalize on being first-to-NRC-approval, but competition is a factor to monitor.
- Political/Government Risk: NuScale’s fortunes are intertwined with government support (DOE cost-share grants, federal clean energy incentives, international agreements). Changes in political priorities could impact funding availability or utility appetite for nuclear projects. For instance, the $25 billion ENTRA1 program funding is tied to a specific geopolitical initiative ([9]) – if that program stalls or is redirected, it could affect project financing. The short-seller bear case even argued NuScale’s equity is worthless “without government support” ([10]). That may be extreme, but it underscores how reliant NuScale is on public-private partnerships and policy frameworks to make projects viable.
- Legal and Governance: The sharp stock swings and perceived missteps have already attracted scrutiny. At least one shareholder rights law firm (Pomerantz) announced an investigation into NuScale in Q4 ([8]), likely exploring whether the company misled investors about its prospects. While such probes are common after volatile drops, they add to headline risk. Internally, NuScale will need to maintain strict governance and transparency to retain investor trust through its high-growth, high-burn phase.
Outlook and Open Questions
With the recent pullback, investors are essentially re-assessing “Is it time to act?” on SMR – either to buy the dip or avoid a potential value trap. The answer depends on how one weighs NuScale’s long-term promise against its near-term challenges. Here are a few open questions that could determine the stock’s trajectory:
- When Will the First Firm Order be Secured? A binding contract (with financing in place) for the first NuScale plant would be a game-changer. Will 2026 finally see the CFPP project reach final agreement, or perhaps a different project (e.g. one of the ENTRA1/TVA initiatives) leapfrog to execution? A confirmed order would validate the technology and potentially unlock new government funding (such as DOE loan guarantees or subsidies) – but continued slippage would feed the bears.
- How Much More Dilution is Coming? NuScale’s cash burn and project commitments suggest additional capital raises are likely by 2026–2027. Can the company attract non-dilutive financing – for example, strategic investments, joint ventures, or project-specific debt – to lessen the burden on common equity? Thus far it has relied mainly on issuing shares. Investors will be watching the pace of any ATM issuance or secondary offerings now that the share count limit has expanded.
- How Will Fluor Exit its Stake? Fluor’s remaining 39% ownership is substantial. Will Fluor pursue a spin-off or distribution of NuScale shares to its own shareholders (which could temporarily depress SMR as those holders sell)? Or might Fluor find a large buyer/partner to absorb a chunk of its position in a negotiated deal (potentially at a discount)? The strategy Fluor (and Starboard) takes in 2026 could create overhang or, if handled delicately, remove a long-term shadow on the stock.
- Can NuScale Reduce Cash Burn or Monetize Interim Services? Management is pivoting from pure R&D to early commercialization, which has slightly boosted revenue (Q3 sales were $8 million vs <$0.5 million a year prior) ([3]) ([3]). Still, expenses are growing faster. Is there an opportunity to generate more near-term revenue – for instance, by licensing its technology abroad, selling training services (e.g. NuScale’s simulator and Energy Exploration Centers), or collecting down payments from customers as projects firm up? Any steps to narrow the cash flow deficit would extend the runway and confidence.
- What is the Timeline for ENTRA1 Projects? The ENTRA1 alliance brought headline-grabbing deals (TVA’s 6 GW plan, the $25 billion U.S.–Japan infrastructure funding) ([9]) ([9]). However, concrete timelines and NuScale’s slice of these programs remain unclear. How soon will ENTRA1 move projects to the construction phase? And will NuScale’s Partnership Contributions to ENTRA1 translate into preferential returns or orders for NuScale’s reactors? Clarity on how NuScale ultimately benefits (beyond providing equipment) will help investors gauge the long-term revenue model.
- Broader Nuclear Sentiment: Finally, one must consider the macro environment. Nuclear energy is experiencing a policy renaissance, but public and regulatory sentiment can shift. How will energy market dynamics (e.g. high fossil fuel prices, carbon policies) and competitors’ progress affect NuScale? If, say, a competitor’s SMR comes online first, or if there’s a nuclear incident elsewhere, could that derail NuScale’s momentum? Conversely, any positive milestone – like a smooth startup of a NuScale module (once built) or further government incentives – could greatly improve sentiment.
In conclusion, NuScale Power (SMR) embodies both the promise and the peril of investing in breakthrough infrastructure technology. The recent 10% slide was driven by tangible concerns – dilution and insider selling – that compound the execution risks already inherent in its story. On the other hand, the company sits at the forefront of a potentially massive nuclear renaissance, with unmatched regulatory approvals in hand and billions in prospective support lining up ([9]) ([9]). “Is it time to act?” may ultimately boil down to one’s risk tolerance and time horizon. In the near term, caution is warranted: key milestones (first contracts, project kickoffs) are still on the come, and further volatility is likely as NuScale navigates its funding needs. However, for investors who believe in the long-term need for carbon-free baseload power, NuScale’s slump could offer a more reasonable entry – albeit one that requires patience and careful monitoring of the red flags discussed. As always with a story stock, it’s advisable to balance the considerable upside potential with the very real risks before deciding whether to take action on SMR at this juncture ([2]) ([2]).
Sources
- https://investor.fluor.com/news/news-details/2025/Fluor-Completes-Successful-Sale-of-NuScale-Class-A-Shares/default.aspx
- https://uk.finance.yahoo.com/news/nuscale-smr-shares-slide-10-174643880.html
- https://fintel.io/doc/sec-nuscale-power-corp-1822966-10q-2025-november-06-20398-2218
- https://tradingview.com/news/investorplace%3A54a08ab61094b%3A0-nuscale-smr-stock-continues-to-fall-following-short-report/
- https://ae.marketscreener.com/news/nuscale-power-llc-enters-into-a-partnership-milestones-agreement-with-entra1-energy-llc-ce7d59ded181f52c
- https://tmia.com/content/bofa-cuts-nuclear-stocks-valuation-concerns
- https://investing.com/news/stock-market-news/bofa-cuts-nuclear-stocks-on-valuation-concerns-4263326
- https://ae.marketscreener.com/quote/stock/NUSCALE-POWER-CORPORATION-137238735/
- https://businesswire.com/news/home/20251029556145/en/NuScale-Power-Proudly-Supports-ENTRA1-Energys-%2425-Billion-Agreement-to-Deploy-Large-Scale-Power-Infrastructure-Assets-Across-the-United-States
- https://nasdaq.com/articles/why-nuscale-power-stock-got-thrashed-on-thursday
For informational purposes only; not investment advice.