Why Did Oklo Stock Drop Today?

Oklo (NYSE: OKLO) stock, the start-up manufacturer of small modular (nuclear) power reactors that surged 35% last week on news of a new contract with Meta (NASDAQ: META), is taking a bit of a breather Monday.

As of 1:40 p.m. ET, Oklo stock is down about 2.1% on no apparent news.

Image source: Getty Images.

Meta's nuclear news

That investors might want to take a bit of profit off the table after Oklo's amazing run last week isn't surprising. But are today's sellers getting out of Oklo at the top... or exiting the airplane just before Oklo takes off even higher?

Oklo wants to build a 1.2-gigawatt nuclear power project in Ohio, and Meta will purchase the power generated by this plant to run its artificial intelligence data centers. Oklo says it will use its Meta money "to secure nuclear fuel and advance Phase 1 of the project." What Oklo doesn't say is how much money Meta will pay, only that Meta will prepay for power the plant will produce.

Does this make Oklo stock a buy?

According to ChooseEnergy.com, the average electricity rate for a business customer in Ohio right now is 12 cents per kilowatt-hour. Times 1.2 gigawatts, that should work out to a total of $144,000 per hour, $3.5 million per day, or $1.3 billion a year.

So we're talking real money here. Still, there's a lot left unknown and unstated in Oklo's press release.

Is this prepayment at current electricity rates? Is the rate discounted in exchange for the very "pre" payment? Oklo doesn't expect to begin producing power until 2030, after all, and won't reach full output capacity before 2034.

I'd be surprised if Meta agreed to pay full freight on electricity that Oklo might not produce for nearly a decade -- if ever.

Rich Smith has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.