Newly listed energy companies face tepid IPO demand
Investor skepticism weighs on AI power stocks as near-term revenue takes priority
The Wall Street Journal reported that investors who once bid up nearly any stock with a story about supplying electricity to artificial intelligence data centers are becoming more selective. The shift in sentiment has weighed heavily on advanced nuclear developers and other energy companies whose revenue timelines stretch years into the future.
Oklo, the nuclear-reactor developer backed by OpenAI’s Sam Altman, has lost roughly 75% of its value since briefly hitting a valuation north of $25 billion last October, around the peak of the AI power surge, according to the Journal. The company has announced deals to provide more than 14 gigawatts of power for Meta and others but has yet to secure key permits or build a power plant.
“At some point you have to say, ‘all right, who’s actually selling stuff to data centers today?’” James West, an analyst at Melius Research, told the Journal.
Shares of Standard Nuclear, a uranium fuel producer that could serve novel reactors, lost 36% of their value since its initial public offering last week. The company raised $150 million after reducing its fundraising target due to tepid demand, the Journal reported.
Fervo Energy, which adapts fracking techniques to produce geothermal energy, offers a shorter timeline. Analysts at Jefferies argued this week that grouping Fervo with out-of-favor advanced-nuclear companies “is unfair,” according to the Journal. While Fervo’s technology is still being proven, its first plant is due to start up this year and reach 100 megawatts of capacity in early 2027. The Journal noted that timeline is far quicker than turning nuclear-reactor blueprints into operating power plants.
Still, the Journal reported that data-center construction may not need to collapse in a full-blown AI bust to frustrate the plans of companies hoping for a long boom. It just has to lag behind the most aggressive forecasts. Access to skilled labor and other bottlenecks are already capping the pace of construction.
The concerns extend beyond developers of novel technologies. Innio, a newly listed company that competes with Caterpillar and others to sell reciprocating engines used for off-grid power, has seen its shares slip in recent weeks, the Journal reported. Its plan to increase manufacturing capacity could come unstuck if the market grows less than expected.
GE Vernova, which makes gas turbines, this week reported an 88% increase in orders. Shares declined, however, after the company set a new target to expand its manufacturing capacity by 2030.
“Today what investors are willing to pay for is the pre-2030, pre-2032 narratives,” BNP Paribas analyst Moses Sutton told the Journal. “They want to put less weight into what they believe will happen in the 2030s.”