We came across a bearish thesis on Oklo Inc. (OKLO) on Twitter by Clay Montgomery. In this article, we will summarize the bears’ thesis on OKLO. Oklo Inc. (OKLO)’s share was trading at $26.37 as of March 26th.
An aerial view of a nuclear plant, its domes casting a unique shadow.
Oklo (OKLO) has skyrocketed to a $5.8 billion valuation, achieving “meme stock” status despite lacking experience in building nuclear reactors. Its business model diverges sharply from traditional reactor companies; rather than selling reactors, Oklo plans to finance, build, and operate nuclear plants itself—funded through continuous stock dilution. This high-risk strategy is amplified by its novel reactor and fuel designs, making it a moonshot reliant on public investment. Oklo initially gained attention for submitting an early application to the NRC in 2020, only to have it rejected after two years due to incompleteness. Undeterred, the company went public via a reverse merger, further fueling speculation-driven growth.
The nuclear industry faces two major hurdles: HALEU fuel supply and NRC regulatory approval. Oklo’s fast-neutron reactor, Aurora, aims to overcome uranium enrichment bottlenecks by using recycled and HALEU fuel. While this approach could theoretically address supply issues, its reliance on speculative fuel sources and underdeveloped infrastructure creates serious execution risks. The DOE Secretary, Chris Wright, has ties to Oklo but lacks the authority to influence the NRC, which remains the primary regulatory challenge. Moreover, the NRC’s advanced reactor division is severely understaffed, with just ten personnel managing over twenty competing SMR designs, raising doubts about Oklo’s ambitious timeline.
Oklo assumes it can sidestep these barriers, projecting zero regulatory delays and unrealistically low HALEU costs—just a quarter of current market prices. However, the reality is starkly different. HALEU production remains limited, with Centrus Energy currently generating only 900 kg per year—far below the 4,750 kg required per Aurora reactor. Congress has yet to fund an expansion of domestic HALEU capacity, leaving Oklo with uncertain fuel supply options. Meanwhile, transporting HALEU requires Category 2 security, a logistical hurdle Oklo seems to underestimate.
Despite these concerns, Oklo has secured a site use permit in Idaho and an initial HALEU allocation for its first Aurora reactor. However, the company has yet to submit a combined license application (COLA) to begin construction, let alone qualify its novel metal HALEU fuel. If fuel qualification necessitates reactor design changes, the entire approval process could restart, delaying commercialization indefinitely. Oklo remains optimistic, assuming a streamlined NRC review that could approve subsequent COLAs in just seven months—an assumption not grounded in historical precedent.
The company recently partnered with Lightbridge (LTBR) to fabricate its metal fuel, boosting both stocks. While the alliance is technically logical, investors seem to misunderstand its limitations—Lightbridge lacks a HALEU supply, and the NRC’s scrutiny could introduce further delays. This dynamic has created a market disconnect. Oklo’s speculative promises have inflated its valuation beyond reason, with the stock trading on retail-driven hype rather than fundamentals. The company has yet to prove its reactor design works, secure a reliable fuel supply, or navigate the stringent NRC approval process. Given these uncertainties, Oklo is a high-risk, high-dilution play with significant downside potential once reality sets in.
Oklo Inc. (OKLO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held OKLO at the end of the fourth quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of OKLO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OKLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.