NuScale Power Corporation (SMR -4.43%) stock fell 3% through 11:25 a.m. ET — and it has General Electric to blame for it.
NuScale develops small modular nuclear reactors designed to be cheaper and faster to build than traditional nuclear power plants. And as it’s fond of pointing out, NuScale is “the first and only SMR to have its design certified by the U.S. Nuclear Regulatory Commission.” But leaders aren’t necessarily winners, and as CNBC reports this morning, NuScale faces serious competition from a much bigger nuclear player, GE Vernova (GEV 1.88%), the former energy arm of General Electric.
GE Vernova’s threat to NuScale
NuScale and GE Vernova both aim to develop small modular reactors, but “small” is a relative term. If a standard nuclear power plant produces 1,000 megawatts of electricity, Vernova’s BWRX-300 reactor aims to cut that output to 300 megawatts (which is still substantial, enough to power a small city of 200,000 homes), while NuScale’s Voygr reactor goes even smaller with a 77-megawatt output.
In other respects, the two companies are more direct competitors. Both Vernova and NuScale advertise their ability to deploy multiple modules of their basic SMR in a single location, to amp up total power production capacity. Both target a global market, with GE Vernova “aiming to deploy small nuclear reactors across the developed world over the next decade,” according to CNBC.
Is NuScale Power stock a sell?
What really sets the two companies apart, though, is their financial capacity to deliver on their promises. While valued at $3 billion in market cap, NuScale boasts less than $10 million in annual revenue and is losing $80 million a year. Analysts don’t expect the company to turn profitable before 2030 at the earliest.
GE Vernova is a $92 billion behemoth earning more than $1.2 billion a year and growing its profits at 40% a year. Just the cash alone on Vernova’s balance sheet is worth twice the price of NuScale’s stock. In any direct contest, I know which stock I’d bet on to win — and unfortunately, it’s not NuScale.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
