Shares of small modular nuclear technology provider NuScale Power (NYSE:SMR) continue to experience wild gyrations amid substantial short-seller action and a series of investigations by law firms.
In a possible knee-jerk reaction, the stock surged nearly 11% in the pre-market session today following a steep 56% decline over the past month. The selling pressure comes owing to a new short report from Iceberg Research.
Last month, Iceberg highlighted that SMR’s contract with the Utah Associated Municipal Power Systems (UAMPS) was at risk of termination. Subsequently, the contract was canceled and Iceberg pointed to escalating costs for the cancellation. Iceberg believes that the cancellation of the UAMPS contract “raises the prospect of bankruptcy for NuScale.”
Further, Iceberg has termed NuScale’s deal to supply 24 units of 77MWe modules to crypto data server company Standard Power as “a pipe dream.” It noted that the only path for NuScale to stay afloat is via a major dilution for its investors.
Amid these challenges, a number of law firms have initiated investigations into potential securities law violations and misleading statements by SMR. Lifshitz Law PLLC, Rosen Law, and Pomerantz Law are among those conducting investigations.
Earlier this month, SMR reported a net loss of $58.3 million on revenue of $7 million for the third quarter. The company had a cash pile of $196.6 million at the end of the quarter.
What Is the Price Target for SMR?
Despite this turmoil, the Street has a Moderate Buy consensus rating on NuScale Power. The average SMR price target of $11.17 implies an eye-popping 346.8% potential upside in the stock. At the same time, SMR remains one of the most shorted names on the Street at present.
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