Why Oklo, Nano Nuclear, and NuScale Power Stocks All Dropped Today

It's Monday -- the day before Election Day -- and nuclear power stocks are in the dumps. Today's sell-off has almost nothing to do with the federal election, however -- but everything to do with federal bureaucrats.

This morning, CNBC reported that the Federal Energy Regulatory Commission (FERC) denied a request on Nov. 1 that would have allowed electric power utility Talen Energy (NASDAQ: TLN) to increase the amount of power one of its nuclear plants in Pennsylvania supplies to a nearby data center operated by Amazon (NASDAQ: AMZN). The grid operator PJM Interconnection and the Susquehanna, Pennsylvania, plant (which Talen owns), had asked to increase the amount of power going to the Amazon data center from 300 megawatts (MW) currently to 480 MW. The plant is still allowed to route 300 MW for Amazon's needs.

Amazon share prices are down 1.6% through 12:10 p.m. ET on the news, and Talen stock fell 4.5%.

The stocks of other, more speculative, nuclear energy companies that had been riding a wave of enthusiasm for nuclear power are suffering even more.

Small modular reactor inventor NuScale Power (NYSE: SMR), for example, is currently trading off 4.6%. Nuclear fuel recycler and would-be nuclear power plant operator Oklo (NYSE: OKLO) has lost 6%. Nano Nuclear Energy (NASDAQ: NNE), which is developing yet another type of nuclear microreactor, is doing worst of all -- down 10.1%.

Bad news for one nuclear power company could be worse news for others

The big story with nuclear power companies -- most of which also generate power from other sources -- began with last month's announcement that Constellation Energy had inked a 20-year deal to supply electricity to help power Microsoft's artificial intelligence (AI) data centers. To provide the power, Constellation plans to restart nuclear power Unit 1 at Three Mile Island.

So far as we know, this Constellation-Microsoft deal is still on. Still, FERC's reasoning for denying Talen permission to expand its power supply to generate electricity for Amazon's nearby data centers is worrisome. FERC, in denying the expansion, said that Talen's allocation of power to Amazon "could have huge ramifications for both grid reliability and consumer costs."

That observation alone was enough to cost Constellation more than 10% of its market cap this morning, despite a sizable earnings beat on its Q3 report this morning. It also seems to have spooked investors in electric utility Vistra (NYSE: VST), which CNBC noted had also been working on an agreement to provide nuclear power to data centers.

Why are NuScale, Oklo, and Nano Nuclear stocks down so much?

Both Constellation and Vistra are large, fully functional electric utility operations drawing power from all sorts of sources -- nuclear power, certainly, but also solar, natural gas, and other sources. Constellation takes in $23.5 billion in revenue annually for its services, and Vistra isn't too far behind, with $14 billion in annual revenue. Both operations are solidly profitable, too, with Constellation earning 20% operating profit margins on its revenue, and Vistra 21%.

Chances are that whether or not FERC blocks their expansion in this instance, both companies will be just fine over the long term. (For example, someone else could provide the power to the data centers, and these utilities could then provide power, that would otherwise go to data centers, to power homes, factories, and so on instead.)

It's just as important to note that CNBC doesn't think Constellation's relationship with Amazon will be fully blocked, just the expansion is. And it's very likely that Talen will end up appealing FERC's decision, which could be overturned.

What makes this story especially interesting (and by "interesting," I mean "worrisome") to investors in NuScale, Oklo, and Nano Nuclear, though, is that these companies are focused on developing small reactors that can be co-located next to a data center -- similar but opposite to how Talen wanted to co-locate a data center next to a nuclear power plant, as CNBC tells the tale. That's much the same approach companies developing small modular reactors would probably take: building power plants close to where power is needed.

As such, FERC's decision appears to pose a greater threat to the business plans of NuScale, Oklo, and Nano Nuclear. The fact that none of these three companies yet has an actual business up and running and generating revenue (or earning profit) naturally makes investors more nervous.

And seeing as Oklo stock has more than doubled over the last 12 months, while Nano Nuclear has nearly quadrupled, and NuScale almost sextupled, it probably makes investors a bit more eager to take profits today, rather than see how this FERC situation eventually resolves itself.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Constellation Energy, and Microsoft. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.