Shares of clean energy company Oklo (NYSE:OKLO) are down big this year — 55%. While the stock market has been doing well, Oklo’s stock has been going in the opposite direction.
Many growth investors see significant growth potential for Oklo and believe it can benefit from opportunities related to investments in data centers for artificial intelligence (AI), which need reliable power sources. But that optimism appears to have faded, with the stock hitting a new 52-week low on Tuesday, at just above $31, a level it hasn’t been at since May of last year.
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The growth potential is still there for Oklo, but now its valuation is much lighter, with its market cap at just under $6 billion. Could now be an opportune time to buy this beaten-down energy stock?
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Oklo’s mounting losses make the stock a risky option
It may be multiple years before Oklo is generating any meaningful revenue, as its Aurora powerhouse at the Idaho National Laboratory is not expected to begin commercial operations until at least late next year. In the meantime, the company is incurring heavy losses and burning through cash.
Its operating loss through the first six months of the year totaled $124.2 million — more than double the $45.9 million loss it posted during the same period a year ago. The reality is that as the business begins to scale and commences operations, its expenses may increase. As a result, it could take several years before the company may potentially be in a position to turn a profit.
For investors looking to own Oklo’s stock, patience is definitely going to be a requirement.
The stock may look cheaper, but it may still not be worth buying
At $6 billion, Oklo’s valuation remains fairly high for a business that’s in such an early stage of its development. It highlights just how egregiously overpriced it was beforehand. While it has come down significantly in value, there’s still plenty of room for the stock to fall even lower.
Rising interest rates and concerns of an AI bubble may have investors less willing to take risks on AI-related investments. Oklo is among the riskiest options in that regard, as it’s largely a speculative buy at this stage.
Oklo may inevitably fall further in the weeks and months ahead. It reaching a new 52-week low is by no means a great buying opportunity. Another 52-week low could, after all, be right around the corner.
