On Oklo, and the challenges and possibilities for US commercial nuclear power

Analyzing the $3 billion company with Sam Altman and Chris Wright on its board

Nuclear power is very much having its moment.

With electric power demand expected to grow meaningfully in the years and decades ahead, more attention is quickly being paid to nuclear power.

That’s part of the reason we’re hearing stories about reopening the Three Mile Island facility in Pennsylvania and the Palisades plant in Michigan.

Oklo wants to be part of the solution here, but by championing new plants instead of revisiting old ones.

According to its website, “Oklo is designing and deploying advanced fission power plants to provide clean, reliable and affordable energy.”

Image on page 15 of Oklo’s Q3 2024 Company Update

As of late November 2024, the company had a market capitalization of just under $3 billion.

Year to date, Oklo’s stock price has more than doubled. Investors are getting increasingly excited about the company’s prospects.

Importantly, management is reporting zero total revenue to date for the company. That means the company’s valuation is based on Oklo growing far, far beyond what it looks like today.

One source of strength for the company? A pair of high profile supporters.

Sam Altman – the well recognized face of OpenAI, the company that brought ChatGPT to market – is an owner and chairman of the board of Oklo.

Chris Wright, the CEO of Liberty Energy who was recently nominated to become the next US Energy Secretary, is also on Oklo’s board.

You can start to see why I want to analyze this particular nuclear power company.

Shareholders are placing a huge bet that Oklo can create meaningful value years in the future. Until then, we will see only further expenses, with no revenue to match.

As you likely know, the nuclear power sector is not exactly chock full of resounding recent commercial success.

In this post, we’ll discuss the history of US nuclear power projects in the 21st century. We’ll show why investors are generally skittish of plowing capital into these projects, which is an important barrier that Oklo will have to work past.

We’ll also discuss Oklo’s financial performance, which is pretty unique given the lack of revenue.

As you might imagine, we need to pay attention to the company’s runway here, since without generating revenue, bringing on new capital can be painful for existing investors.

We’ll discuss how much capital Oklo has, how it plans to use it, and how long this plan may take.

Finally, Kerrisdale Capital published a report describing why it’s short shares of Oklo, i.e. why Kerrisdale is betting against the success of Oklo. Over its 26 page report, Kerrisdale presents one thesis around why Oklo might not work out the way management and investors hope.

Of course the US nuclear sector is much larger than just Oklo.

But by studying Oklo, we can get an important sense of the challenges facing this cohort of increasingly prominent nuclear power companies.

The US nuclear power sector has experienced some high profile setbacks