Thread by @IcebergResear

We are short NuScale ($SMR).
NuScale Power ($SMR): A Fake Customer and a Major Contract in Peril Cast Doubt on NuScale’s viability
iceberg-research.com/2023/10/19/nus…

The developer of small modular nuclear reactors recently disclosed a huge contract with blockchain datacenter provider Standard Power. The deal aims for a projected capacity of 1,848 MWe that we estimate is worth ~$37bn.

The contract will never get executed. Standard Power clearly can't support this contract. Its MD Adam Swickle was found guilty of securities fraud in the past.

NuScale also has a contract with the Carbon Free Power Project (“CFPP”) for the Utah Associated Municipal Power Systems (“UAMPS”). CFPP has been supportive of the project despite contracted prices going up, from $55/MWh in 2016, to $89/MWh in 2023.

However, many have missed that NuScale faces a Jan 2024 deadline to raise project commitments to 80% or 370 MWe, from 26% or 120 MWe. Failure means a high risk of termination.

Crucially, participants were promised refunds if the 80% threshold is not reached and the project is terminated, incentivizing them to drop out. We are 3 months to the deadline and nothing has changed.

NuScale has around 15 months before its cash runs out. We fully expect further shareholder dilution, as completion of the CFPP remains an iffy prospect with its constant cost overruns. On 13 Oct 2023, former CFO Chris Colbert sold the last of his NuScale stake.

The delusional Standard Power contract seems more like a desperate bid to shore up investor confidence. NuScale's struggles are unlikely to resolve without DOE aid, but such support is expected to requires private sector cost-sharing, leading to shareholder dilution.