Motley Fool calls Wall Street valuations on nuclear startup Oklo 'bit too optimistic'

Wall Street’s consensus forecast for shares of mid-cap company Oklo, which is building compact nuclear power plants, looks overly optimistic, writes Motley Fool contributor Jack Delaney in a recent post. The company is not yet generating revenue and is only spending money, with no mechanism in place to turn a profit in the short term, he explained.

Wall Street’s expectations for Oklo shares are too high, Delaney believes. The consensus among analysts covering the stock puts its 12-month target price at $87 per share, around 112% above its Friday closing price. Delaney believes the stock could reach that level, but over a longer time horizon. The company is developing nuclear power plants that it plans to fuel itself using its own recycling technologies.

Oklo’s vertical integration, together with recycling technologies, distinguishes it from competitors, but the company has yet to begin commercial operations or generate revenue, Delaney noted. In the first quarter, its operating expenses almost tripled to $51.2 million, while the net loss widened around 3.5-fold to $33 million. At the same time, Delaney noted that Oklo is well funded: as of March 31, it had $2.5 billion in cash and equivalents.

Oklo was founded in 2013 by Jacob DeWitte and Caroline Cochran. DeWitte, who by then had spent several years studying nuclear reactors at the Massachusetts Institute of Technology, identified a problem: the industry relied primarily on large reactors, causing nuclear-plant construction to drag on for decades. He decided to focus on developing small nuclear reactors.

One of the company’s first major investors was Sam Altman, CEO of OpenAI. He became chair of Oklo’s board in 2015 and helped take the company public in 2024 through a merger with his SPAC. Altman stepped down as chair of the board in April after Cochran “alluded to the potential for collaboration with OpenAI,” Barron’s wrote. Insider Monkey called Altman’s departure crucial to avoiding conflicts of interest.

Oklo currently has nine active projects in the U.S. spanning the entire value chain, from isotope fission to fuel production and nuclear-plant construction. None has entered commercial operation.

Oklo shares have fallen 41% year to date, but most analysts remain upbeat. The stock has 12 “buy” calls versus nine “hold” and one “sell” ratings.