Why Nano Nuclear Energy Stock Collapsed 26.6% Last Month

Shares of Nano Nuclear Energy (NASDAQ: NNE) slipped a sharp 26.5% in the month of December, according to data from S&P Global Market Intelligence. A nuclear energy research company focused on building microreactors, Nano Nuclear Energy is still not generating any revenue and burning a significant amount of cash, which has investors nervous about the business. It is riding high on the nuclear energy renaissance, but some of the excitement has dissipated from this sector in recent months.

Here's why Nano Nuclear Energy stock declined in December, and whether you should consider buying shares today.

No revenue and shareholder dilution

Management for Nano Nuclear talks a big game. It has plans to build tiny microreactors for nuclear energy, is working on energy-fuel transportation, Uranium enrichment, and is even studying the feasibility of utilizing microreactors in space. It regularly issues press releases regarding the acquisition of licenses and partnerships with colleges and the U.S. Department of Energy.

With all this talk, you would think that Nano Nuclear Energy is a large operating business. That is incorrect. Nano Nuclear Energy has never generated any revenue and does not have a reactor approved by the Nuclear Regulatory Commission (NRC), nor does it have a working physical model. Since going public, it has consistently burned cash, with a negative free cash flow of $37 million in the last twelve months, as reported in December.

Another factor hurting the stock is the rising number of shares outstanding, as the company issues new shares to fund its losses. Shares outstanding rose yet again last quarter and are up 77% since 2024, when it went public less than two years ago. This is a headwind to long-term growth in earnings per share (EPS) and free cash flow per share, which will likely hinder the share price from rising.

Image source: Getty Images.

Should you buy Nano Nuclear Energy?

There is excitement surrounding the nuclear energy space, with other pre-revenue stocks, such as Oklo, reaching a market cap of $14 billion. Enthusiasm for the sector couldn't be higher due to the proposed electricity needs from artificial intelligence (AI) data centers.

The problem is, when you look at the underlying businesses of Oklo or Nano Nuclear Energy, they leave much to be desired. Nano Nuclear Energy stock has a market cap of just $1.56 billion, but that is compared to zero revenue generation and a history of losses. Additionally, it lacks a near-term path to producing a working product, if it can be developed at all.

Micro nuclear reactors are an unproven technology. Despite the investor excitement around nuclear energy, you should stay away from buying Nano Nuclear Energy stock after its dip in December.

Brett Schafer 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.