Oklo’s Stock Moving In Pre-Market, But Which Way?

Oklo Inc (NASDAQ: OKLO) is moving up in this morning's pre-market, gaining 4.13% to wipe out yesterday's decline. The emerging developer of small modular nuclear reactors (SMRs), hit as high as $22.94 in trading on Wednesday, as news of a clean power agreement with Switch hit. A huge swing in price underlines some of the volatility that has come to be expected.

This optimism in the nuclear part of the clean energy sector took us back to November, when excitement surrounding SMRs really peaked. Some of the hype has died down, but Oklo's stock is holding strong above the $18 support level, with the pre-market move indicating an open above $19 (OKLO currently trading at $19.14).

Oklo has entered into a strategic partnership with Switch, a privately owned AI data center operator valued at over $5.4 billion. Together, they plan to deploy 12 gigawatts (GW) of Oklo's Aurora powerhouse projects, aiming for completion by 2044. This ambitious plan positions Oklo to supply potentially enough energy to power approximately 9 million homes or serve Switch's expansive data center operations.

Despite the promising prospects of this deal, it is essential to note that the agreement between Oklo and Switch is non-binding. No detailed financial terms or payment timelines have been disclosed, leaving some open questions about the deal's financial structure and impact. However, Oklo has heralded the arrangement as one of the largest corporate clean power agreements signed thus far, underscoring the potential significance of this partnership in terms of scale and market impact.

The agreement provides a substantial long-term vision, but Oklo's path to profitability remains distant. The company is currently unprofitable and is not expected to turn a profit before 2029. This timeline highlights the challenges and long-term nature of its business model focused on clean nuclear technology.

The strategic move with Switch is a bold step in advancing Oklo’s agenda towards sustainable energy solutions, and it showcases a significant potential to reshape how power is sourced for large-scale AI operations. Yet, as the agreement stands non-binding, both parties will need to address critical details to transition from vision to execution, ensuring a coalescence of technological and infrastructural advancements needed for such a large-scale deployment.