Why NuScale Power Stock Crashed Today

Motley Fool
08/02
  • Fluor announced it will convert 15 million of its Class B shares in NuScale into Class A shares.
  • Once this happens, Fluor will be able to begin selling the Class A shares on the stock market.
  • Investors expect this is precisely what Fluor intends.

Shares of NuScale Power (SMR -10.12%), the nuclear reactor-builder, tumbled 11.7% through 11:50 a.m. ET Friday -- not for any fault of its own, mind you.

Instead, you can blame it all on Fluor (FLR -28.41%), which has decided to unload a big chunk of the NuScale shares it owns.

Image source: Getty Images.

Fluor selling out?

Fluor reported poor earnings this morning, you see -- with sales down 6% year over year and adjusted profit cut nearly in half. More importantly to NuScale investors, though, is the fact that Fluor wants to convert 15 million of the Class B NuScale shares it owns to Class A shares... and then sell them.

And why?

As Fluor pointed out, gains in the value of its NuScale shares contributed $3.2 billion in "pre-tax mark-to-market gains" on its profit in Q2 -- but the roller-coaster ride that is NuScale is also contributing to "volatility" in Fluor's results, and forcing Fluor management to make "recurring fair value measurements" as it tracks NuScale's ups and downs.

Power" current_price="45.13" daily_high="45.98" daily_low="41.92" default_period="OneYear" dividend_yield="N/A" exchange="NYSE" fifty_two_week_high="53.50" fifty_two_week_low="6.88" gross_margin="76.67" logo="https://g.foolcdn.com/art/companylogos/mark/SMR.png" market_cap="$7B" pe_ratio="-36.73" percent_change="-10.12" symbol="SMR" volume="1,061,546">

Is it time to sell NuScale stock?

To fix this, Fluor said in its post-earnings conference call, the company will later this month convert 15 million NuScale Class B shares into Class A shares. The implication is that Fluor might then sell these A shares for cash. More than just simplifying accounting, this would return value to shareholders, says Fluor, by letting them cash in on NuScale's remarkable high-flying stock.

It would also, however, threaten to flood the market with cheap NuScale shares, depressing the share price. This, in a nutshell, is what's worrying investors today. This is the reason they're selling off NuScale stock.

With NuScale stock up fivefold over the past year, and this new risk on the horizon, it looks like a good time to sell.

免責聲明:投資有風險,本文並非投資建議,以上內容不應被視為任何金融產品的購買或出售要約、建議或邀請,作者或其他用戶的任何相關討論、評論或帖子也不應被視為此類內容。本文僅供一般參考,不考慮您的個人投資目標、財務狀況或需求。TTM對信息的準確性和完整性不承擔任何責任或保證,投資者應自行研究並在投資前尋求專業建議。

熱議股票

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10