Why Oklo Stock Dropped on Thursday

Oklo (NYSE: OKLO) stock, one of a handful of new energy companies working to commercialize small modular nuclear reactor technology, tumbled more than 7% early Thursday morning before recovering to about a 1.3% loss as of 12:20 p.m. ET.

The big dive early was sparked by an Oklo announcement last night, in which the company said it will create and sell $400 million worth of new shares of common stock (and potentially, up to $460 million shares if underwriters exercise their overallotment option).

Image source: Getty Images.

Oklo's big share sale

Oklo intends to use the money raised from this share offering "for general corporate purposes, working capital and capital expenditures, and potential future investments." This is another way of saying that Oklo doesn't make any money currently, and needs to sell shares to raise cash in order to fund its ongoing operations.

The company didn't name any other specific use for the cash, such as buying another company.

Is Oklo stock a buy?

So Oklo is selling a lot of new stock. The question for investors is: Should you buy it?

That really depends on how quickly you think Oklo can commercialize its business and begin generating cash on its own, so that it doesn't need to keep selling shares. Analysts polled by S&P Global Market Intelligence don't expect Oklo to begin generating any revenue at all until 2027, and forecast profitability won't arrive until 2030 -- five years in the future. Worse, they believe Oklo will still be burning cash (and needing to sell shares to remain solvent) through at least 2034 -- and probably longer than that.

Call me a cynic, but if you ask me, a purchase of Oklo stock today isn't "investing" at all. It's speculating, pure and simple.

Should you invest $1,000 in Oklo right now?

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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.