NuScale Power (NYSE: SMR)a developer of small modular reactors (SMR), went public through a 2022 merger with a special purpose acquisition company (SPAC). Its shares opened at $10.70, rose to an all-time high of $53.43 last October, but now trade at around $14.
NuScale is a divisive investment because it hasn’t sold any reactors yet. Instead, much of its future growth potential has already been priced into its $4.04 billion market capitalization, valuing the company at 40 times its 2026 sales. Will NuScale grow to its premium valuations over the next ten years?
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NuScale SMRs can be installed on vessels just 65 feet high and nine feet wide. They are prefabricated and assembled on-site in a modular manner to reduce the time, labor and costs required to build a nuclear power plant.
NuScale is the only SMR manufacturer to have standard design approvals (SDAs) from the US Nuclear Regulatory Commission (NRC), which approved its 50 MWe design in 2023 and its 77 MWe design last year. It once planned to deploy six 77 MWe reactors in Idaho to build a 462 MWe plant, but that ambitious project collapsed amid skyrocketing costs in 2023.
Today, NuScale generates the majority of its revenue as a subcontractor for Fluorine (NYSE: FLR) in the planned construction of a similar 462 MWe plant for the Romanian RoPower. This Romanian project is still in the initial engineering and design (FEED) phase, but should move forward after its final investment decision (FID) this year.
NuScale sales could soar over the next decade as two catalysts come into play. First of all, your RoPower project could finally enter the implementation phase. Second, it recently agreed to deploy up to six gigawatts of its SMR capacity in seven states for the Tennessee Valley Authority (TVA).
NuScale originally planned to deploy its first SMRs in Romania by 2027-2028. But it postponed that launch date until 2030, and some analysts don’t expect those reactors to come online until 2033-2034. In the United States, its first TVA reactors will probably not be installed until 2032.
Until the end of the decade, the majority of NuScale’s revenue will likely continue to come from fees from its FEED studies in Romania. It will likely remain unprofitable and will continue to dilute its shares with secondary offerings. Its shares could soar by 2036 if it successfully activates its first reactors in Romania and the United States, but it will remain a speculative play for the foreseeable future.