Why Did Oklo Stock Pop Today?

Oklo (NYSE: OKLO) stock, a start-up manufacturer of small modular (nuclear) power reactors, surged 5.5% through noon ET on Friday -- apparently on no good news at all.

Actually, the opposite: Reports out of Finland say a technical fault at the Olkiluoto Nuclear Power Plant caused one of the site's three units, "OL2," to shut down temporarily today.

Image source: Getty Images.

Traditional nuclear versus SMR

Is this bad news for nuclear power investors? If so, it's not terribly bad.

News site "Mezha" reports the "unplanned unavailability" of the reactor was related to "an update of the power management system software" and should last no more than 16 hours. The reactor shut down when the fault was reported, and did so safely. Furthermore, "the incident did not compromise the facility's safety, and the other units at the plant continue to operate normally."

I suppose investors may read this news and think, "Well, anything that's bad for traditional nuclear reactors could be good for the adoption of SMRs instead." But you'd still more likely expect an incident like this to spook nuclear power investors than excite them.

From that perspective, Oklo's 5.5% price increase on the Finnish news probably speaks more to investors' irrational exuberance about nuclear power stocks than to their correct interpretation of whether the news was "good" or "bad."

Is Oklo stock a buy?

Oklo's rising stock price also doesn't speak highly of investors' ability to properly gauge the risk of investing in expensive, unprofitable nuclear stocks. With no revenue forecast before 2027 and no profits till 2030, there's a lot of time for things to go wrong for Oklo stock, and no profits or free cash flow to support it in the meantime.

Investors beware: This nuclear engine is running solely on momentum.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.