Short sellers reap US$2 billion profit as modular nuclear reactor stocks tumble

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeEnergyFinancial TimesShort sellers reap US$2 billion profit as modular nuclear reactor stocks tumbleUnproven technology won investment from power-hungry AI hyperscalers but has yet to deliver consistent revenuesAuthor of the article:Last updated 42 minutes ago NuScale, which reported a US$96.7 million loss in the first half of 2026, faces a shareholder class-action lawsuit alleging it misled investors. Photo by Handout/NuScaleShort sellers have reaped large profits from betting against small modular nuclear reactor companies, as the collapse of the “hype cycle” that had sent their share prices soaring wipes billions off their market value.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountFunds made an estimated US$2.1 billion shorting three stocks — United States-listed NuScale Power, Nano Nuclear and Sam Altman-backed Oklo — over the past year, according to data provider S3 Partners.The three companies, which are lossmaking and have little or no revenue, surged last year as investors raced to capitalize on growing interest in nuclear energy among AI hyperscalers looking for new sources of power. Regulatory changes and funding announcements from the Trump administration also helped the sector.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againBut a total of US$30.3 billion has been wiped off their collective market value since their peak in October last year amid growing concerns over the lack of immediate revenue and the long build-out timelines for the technology.“The stocks were overinflated in price, based on speculation,” said Adam Stein, director of nuclear energy innovation at the Breakthrough Institute, a climate and energy think-tank.The sector went through a “textbook hype cycle” last year, he added. “[It is] very typical of a company that is in this early pre-consistent revenue phase.”Small modular nuclear reactors are assembled from modules built in factories to save time and money, and produce around 300MW or less, compared with more than 1,000MW for traditional reactors.Only two commercial SMRs are currently operable — in Russia and China, with more than 80 designs in various stages of development.A key test of investor appetite towards the nuclear sector is expected in the coming weeks, when Holtec International and Westinghouse, two U.S.-based companies with SMR divisions, are expected to list.Short sellers have piled into bets against the companies based on a view that their shares rose to unsustainable levels, driven by a limited supply of publicly traded stocks and a focus on the potential demand from AI, rather than the time and capital expenditure required to commercialize the technology.“On the one hand there was some support from the government, and no one wants to bet against Trump, and on the other there was this whole AI [demand] story which everyone was really bullish about [last year],” said Christian Putz, founder and chief executive of investment firm ARR Investment Partners, who has previously shorted Oklo but has since unwound that position.Around 18 per cent of Oklo and NuScale’s outstanding shares remain out on loan — a proxy for short selling — while almost 30 per cent of Nano’s are on loan, according to S&P Global Market Intelligence.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Meanwhile, X-energy has shed US$5.8 billion in market value since the surge that followed its initial public offering in April. Short sellers have earned an estimated US$67 million from bets against the company since mid-May, according to S3 Partners. The company, which is backed by Amazon and Ken Griffin and has yet to receive full regulatory approval to build its helium-cooled reactor, has nine per cent of its shares out on loan.“The sentiment has changed this year, people are far more critical,” said Putz. These companies “have almost zero revenue for the foreseeable future and, on top of that, there are very high capex [capital expenditure] requirements”.Demand for energy in the U.S. is set to soar over the coming decade, in part due to the rapid development of power-hungry data centres by AI hyperscalers. According to data from BloombergNEF, U.S. data centre power demand is set to climb from 34.7 gigawatts in 2024 to 106GW by 2035.Big Tech is increasingly turning to the emergent SMR technology to meet its future power needs. In January, Meta struck a deal with Oklo and Bill Gates-backed TerraPower, in which it agreed to make an upfront cash injection to support development of the reactor technology.The Trump administration vocally backed the nuclear sector last year, pledging to cut red tape and invest tens of billions of dollars to build new reactors and reopen old ones to generate the energy needed to “win” the global AI race. In June, the Department of Energy announced US$17.5 billion of loans to help rebuild the U.S. nuclear supply chain.However, timelines for delivery of the unproven reactors remain uncertain. Analysts at BNP Paribas have expressed concerns over shortages of high-assay low-enriched uranium, a special type of nuclear fuel vital for SMRs. The earliest some will come online is mid-to-late 2028, if manufacturers are able to speed up delivery while also satisfying regulators, although the majority will arrive during the 2030s, said Stein at the Breakthrough Institute.NuScale, which reported a US$96.7 million loss in the first half of 2026, faces a shareholder class-action lawsuit alleging it misled investors, to which it must respond by September 8. It is building a modular light-water reactor based on a more conventional pressurized-water design.Nano Nuclear — whose microreactors are in the development stage — had not reported any revenue until the second quarter of this year, when it bought a revenue-generating nuclear logistics company called Secured Transportation Systems. Nano Nuclear reported an operating loss of US$15.8 million for the quarter.Oklo hopes to deliver commercial power to customers from its liquid sodium rather than water-cooled Aurora reactors. U.S. energy secretary Chris Wright was previously a board member. It has yet to secure a full licence from the U.S. nuclear regulator to build and operate its reactor.“What we have seen in 2025 seems to me like an industry bubble that is already deflating,” said Siegfried Eggert, chief executive of activist short seller Grizzly Research, who has no short positions against the companies.“I believe most knowledgeable investors understood for a while that the valuations seemed rather extended given the timeline of this industry,” he added.Nano Nuclear said the rise or fall in the share price of companies said little about the success of the underlying business and disputed the “hype cycle” characterization. Oklo said the company had made “tangible progress” over the past year and expected commercial operation of its Aurora reactor to begin in 2028.NuScale and X-energy declined to comment.This article has been amended since publication to clarify Nano Nuclear’s second-quarter results.© 2026 The Financial Times LtdWe apologize, but this video has failed to load.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.