By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is that NuScale's current financial situation and capital-intensive nature pose significant risks, with dilution being a major concern. While NuScale's NRC certification provides a unique advantage, it may not be enough to overcome the funding challenges and potential shareholder dilution.
Risk: Severe dilution for current shareholders due to equity raises at depressed valuations to fund operations and growth.
Opportunity: NuScale's unique position as the only SMR with full NRC design certification, potentially de-risking timelines and positioning it for DOE grants or hyperscaler PPAs.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
NuScale Power stock plunged more than 80% from its October peak.
Historical data shows nearly half of stocks with similar drawdowns eventually recover to their previous peak.
While the data is encouraging, NuScale still faces real risks, including potential funding shortfalls and a seven-year deployment timeline for its small modular reactors.
NuScale Power (NYSE: SMR) stock exploded last year as investors looked to capitalize on the enormous energy demands of artificial intelligence (AI). In the years to come, the power-hungry technology will increasingly strain an already taxed grid, creating an urgent need that NuScale and other small modular reactor stocks could help fill.
But, as so often is the case, what went up came down -- hard. After peaking at $57.42 in October of last year, shares plunged as much as 82%. The stock now trades around $12, and are currently 76% from its all-time high.
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That's quite a fall.
But before you write NuScale off as a lost cause, consider what history shows happens to stocks in the same boat.
A recent study by Morgan Stanley's Counterpoint Global examined the performance of thousands of stocks that experienced significant declines over the last 40 years -- more than 6,500 from 1985 to 2024. It's likely the most thorough analysis of stocks in the same position as NuScale you're liable to find.
For stocks that found themselves in the same position -- an 80% to 85% drawdown -- 49% recovered to "par" -- the previous peak the study measured from -- or surpassed it, taking an average of 4.2 years to do so.
Take a look at the table below, showing the relationship between the magnitude of the drawdown and stock performance in the years that follow. You can clearly see that the further a stock falls, the less likely it is to get back to par, especially once you reach 95% and above.
| Max Drawdown | Median Recovery (% of Par) | % That Get Back to Par | Avgerage Time Back to Par | Median 5-Year Annualized Return | |---|---|---|---|---| | 95%-100% | 16% | 16% | 8 years | 54.9% | | 90%-95% | 65% | 37% | 5.8 years | 46.6% | | 85%-90% | 78% | 42% | 4.6 years | 37.9% | | 80%-85% | 100% | 49% | 4.2 years | 38.1% | | 75%-80% | 122% | 54% | 3.8 years | 35.2% | | 70%-75% | 131% | 62% | 3.4 years | 29.1% |
Consider a generic stock that peaks at $100 and falls 80%, trading at $20. A recovery to $100 would mean a 400% gain from the low. That is exactly what nearly half of the stocks studied did. And many went on to do much better.
Take Nvidia: the AI behemoth saw shares fall 82% in 2002 and went on to become one of the best-performing S&P 500 stocks of all time.
Now, there are some important -- and pretty massive -- caveats here. First, the data set excludes companies that were delisted due to bankruptcy or similar reasons. If NuScale were to run out of funds -- a real possibility given the industry -- these lessons would not apply.
Second, and closely related to the first, there is no way to know if NuScale stock's bottom is 82%. It could fall further from here and end up in the more than 95% drawdown bucket, where only 16% of stocks scrape back to par -- a very different picture.
And finally, to attain these returns, you have to buy at the precise bottom, something that is impossible to do. No one can time the market reliably.
So, obviously, you shouldn't take this data as any sort of guarantee of recovery or a prediction of 400% returns. But what I hope it shows you is that a major drawdown is not a death sentence for a stock, by any means.
NuScale is developing an exciting technology with the potential to be transformative. But it is a long road to get there. Even though Small Modular Reactors (SMRs) are much faster to deploy than traditional nuclear reactors, the process is still roughly seven years, which creates serious execution risk.
Still, the payoff could be substantial, and I think NuScale is worth owning for investors with an appetite for risk and a long investment horizon.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Historical recovery data is irrelevant for pre-revenue firms because it excludes the bankrupt entities that represent the most likely outcome for cash-burning, long-timeline technology developers."
The article's reliance on historical drawdown data is a classic 'survivorship bias' trap. By citing Morgan Stanley’s study while ignoring the companies that went to zero, the author frames a speculative bet as a statistical probability. NuScale is a pre-revenue, capital-intensive R&D play, not a cyclical stock experiencing a temporary valuation compression. With a seven-year deployment horizon, the company faces an existential 'valley of death' where cash burn will likely necessitate massive shareholder dilution before a single SMR is operational. Investors aren't just betting on the technology; they are betting on the company's ability to survive multiple rounds of equity financing in a high-interest-rate environment.
If NuScale secures a major government contract or a breakthrough in regulatory approval, the scarcity of SMR providers could trigger a massive short squeeze and a valuation re-rating regardless of current fundamentals.
"NuScale's recovery odds are far below 49% due to its zero-revenue burn rate and proven project delays, unlike diversified survivors in the Morgan Stanley dataset."
The Morgan Stanley study offers statistical comfort—49% of 80-85% drawdown stocks recover to prior peaks in 4.2 years avg—but it's generic history excluding bankruptcies, which loom large for pre-revenue NuScale (SMR). Cash burn is acute with no meaningful sales, and the article downplays execution flops like the canceled UAMPS project (cost ballooned 80%+ to $9.3B). AI grid strain is real, yet nearer-term fixes favor cheap nat gas peakers + batteries over 7-year SMR timelines amid regulatory hurdles and rivals (e.g., GE Hitachi). Broad nuclear sector (URNM ETF) looks speculative; SMR risks dilution or failure before payoff.
If NuScale lands DOE funding or hyperscaler offtake deals amid surging AI power needs (projected 160% data center demand growth by 2030), it could mirror Nvidia's post-crash ascent as SMR leader.
"The survivorship-bias-cleaned historical data obscures that pre-commercial, capital-intensive nuclear plays face extinction risk orders of magnitude higher than the broad 80% drawdown cohort."
The Morgan Stanley study is intellectually dishonest framing. Yes, 49% of 80%-85% drawdown stocks recovered—but that's survivorship bias baked in. The dataset excludes bankruptcies, delisted companies, and sector-wide collapses. For capital-intensive, pre-revenue nuclear plays like SMR, the failure rate is orders of magnitude higher than the broad market. The 7-year deployment timeline means SMR needs sustained funding through multiple economic cycles and tech iterations. AI power demand is real, but it's also attracting utility-scale solar, battery storage, and natural gas—competitors with faster ROI and lower execution risk. The article's Nvidia comparison is cherry-picked; for every Nvidia there are 50 Enrons.
If AI truly becomes the constrained resource and grid capacity becomes the bottleneck by 2027-2028, first-mover advantage in deployable nuclear capacity could be worth far more than the current $3B market cap, making SMR a genuine asymmetric bet.
"NuScale faces existential funding and regulatory risks that dwarf any typical post-drawdown rebound, making a meaningful move back to prior highs unlikely without a rare funding/licensing breakthrough."
NuScale is down ~82% from its October high, but the article leans on a historical rebound study to a hopeful conclusion. The real issue for NuScale isn’t a historical appetite for risk—it's whether the company can survive its near-term funding crisis and achieve even a modest revenue path. SMR deployment carries a seven-year, capital-heavy timeline with licensing, supply chain, and construction risks that could sap liquidity long before any cash flows appear. Survivorship bias in the data matters: many 80%-plus drawdowns never recover, especially when delistings or bankruptcy loom. The AI energy demand backdrop is speculative, and policy shifts could alter the odds.
Bullish counterpoint: If NuScale clears key licensing milestones and signs a strategic customer, the deployment ramp could accelerate. A favorable funding round or government backing could re-rate the stock as an infrastructure-like play with policy support.
"Severe equity dilution required to fund the seven-year R&D cycle makes a return to previous valuation peaks mathematically improbable for existing shareholders."
Claude and Grok correctly highlight the 'valley of death,' but everyone is ignoring the specific capital structure risk. NuScale isn't just pre-revenue; it’s a 'junk-bond-in-waiting' scenario. If they bridge the funding gap via equity, the dilution will be so severe that even a successful technology rollout won't yield meaningful EPS for current shareholders. We are debating the tech, but the real story is a balance sheet that mathematically precludes a return to prior highs.
"NuScale's NRC approval moat could attract non-dilutive capital, extending runway beyond consensus fears."
Gemini rightly stresses dilution's math, but all panelists overlook NuScale's unique moat: it's the only SMR with full NRC design certification (Dec 2022), de-risking timelines vs. GE Hitachi et al. This positions them for DOE's $900M+ ADVANCE grants or hyperscaler PPAs with minimal equity raises. Still, $120M cash (Q1'24) vs. $80M+ quarterly burn = 18-month fuse to funding cliff.
"NRC certification is a competitive edge, but it's worthless if equity dilution before first deployment destroys per-share value for current holders."
Grok's NRC certification point is material—it does de-risk vs. competitors—but the 18-month cash fuse overwhelms it. Gemini's dilution math is brutal: even if NuScale hits every milestone, equity raises at depressed valuations mean current shareholders are funding a recovery they won't see. The moat matters only if the company survives to deploy it. Nobody's quantified how much dilution is baked in at $3B market cap with $80M quarterly burn.
"NRC certification does not eliminate the looming funding cliff; dilution risk dwarfs any potential moat upside."
Grok’s NRC-certification moat is appealing but misleading. Licensing de-risk helps, but the bigger risk is funding. With an 18‑month fuse to a cash cliff and potential cost overruns on a capital‑intensive build, dilution is baked in even if milestones are hit. DOE grants or hyperscaler PPAs may not come on schedule or on favorable terms, so the moat may not translate into meaningful upside for current holders.
The panel consensus is that NuScale's current financial situation and capital-intensive nature pose significant risks, with dilution being a major concern. While NuScale's NRC certification provides a unique advantage, it may not be enough to overcome the funding challenges and potential shareholder dilution.
NuScale's unique position as the only SMR with full NRC design certification, potentially de-risking timelines and positioning it for DOE grants or hyperscaler PPAs.
Severe dilution for current shareholders due to equity raises at depressed valuations to fund operations and growth.