Why Energy Stocks Plummeted Today: Plug Power, Oklo, Constellation, Nano Nuclear
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Nuclear power stocks, including Oklo, Constellation Energy, and Nano Nuclear Energy, have opened the week with significant losses, with shares down 6.3%, 6.5%, and 10.8% respectively. This downtrend is being attributed to the U.S. Department of Energy’s reported contemplation of “dramatic cuts” to nearly $10 billion in federal funding for clean-energy projects. As the potential cuts are related to multiple energy sectors and thousands of jobs are at risk, investors are feeling nervous, despite no final decisions having been made yet.
Nuclear and Hydrogen Stocks See Drop in Wake of Proposed Cuts
Nuclear power stocks, including Oklo (NYSE: OKLO), Constellation Energy (NASDAQ: CEG) and Nano Nuclear Energy (NASDAQ: NNE), experienced a downturn this week with stocks dropping by 6.3%, 6.5% and 10.8% respectively. Hydrogen power stocks, such as Plug Power (NASDAQ: PLUG), also suffered with a 11.8% decrease.
The reported downturn is linked to a Wall Street Journal report revealing potential cuts to nearly $10 billion in federal funding for clean-energy projects by the U.S. Department of Energy. The potential cuts, proposed by the Elon Musk-led Department of Government Efficiency, could include funds for hydrogen, carbon capture, energy storage and nuclear energy projects.
While thousands of jobs at the Department of Energy could be at risk, the DOE has confirmed that no final decisions have been made and multiple plans are still being considered. Despite this, the ongoing talk of cuts, and potential loss of up to $10 billion in federal funding, has created unease amongst investors.
However, despite potential cuts, some clean-energy programs have received funding under the Biden-era Inflation Reduction Act green energy program, including a nuclear project: the Palisades nuclear plant restart in Michigan. While Trump has been vocal in criticizing some green energy programs, he has remained relatively silent on nuclear power programs. This could potentially signal good news for investors in nuclear power stocks.
Investors who remain optimistic about the nuclear industry can manage their risk by focusing on profitable companies. For instance, Constellation Energy stock, with $3.7 billion in trailing net profit, is considered a lower-risk bet in comparison to Oklo or Nano Nuclear Energy. Both of these companies are currently unprofitable with projections of profitability only in the distant future, according to S&P Global Market Intelligence.
However, before investing in nuclear power stocks, investors should consider other options as well. The Motley Fool Stock Advisor analyst team recently identified 10 best stocks for investors to buy now. The selected stocks have potential for high returns in the coming years, and Constellation Energy did not make the list.
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