Class Action Lawsuit Emerges as NuScale Faces Persistent Pre-Commercial Risks and Dilution Concerns

What happened

The Portnoy Law Firm has announced a class action lawsuit on behalf of NuScale Power investors who purchased securities between May 13, 2025, and November 6, 2025, a period marked by significant equity raises and operational challenges. This legal action likely stems from allegations related to disclosures or performance during that timeframe, as highlighted in DeepValue's report, which notes NuScale's heavy reliance on at-the-market equity issuance and lack of binding module delivery contracts. During the class period, NuScale reported a -$199.9 million free cash flow and executed a $148.5 million payment to ENTRA1, raising questions about capital allocation amid no commercial orders. The report emphasizes key risks such as Fluor's ongoing stake monetization and the absence of binding power purchase agreements, which have left the company vulnerable to dilution and sentiment shifts. This lawsuit introduces additional legal and reputational overhang, compounding the existing uncertainties around regulatory milestones like NRC Part 53 finalization and customer contracting progress.

Implication

Investors face heightened uncertainty as the lawsuit may lead to potential settlements or legal costs, straining NuScale's cash reserves and increasing its dependence on dilutive equity issuance. This development reinforces the DeepValue report's caution on dilution risk, especially with Fluor targeting stake monetization by end-Q2 2026 and NuScale's history of ATM sales. The legal overhang could accelerate negative sentiment, making it harder for NuScale to secure favorable terms for future capital raises or attract new investors. Monitoring key catalysts, such as ENTRA1 signing a binding PPA or NRC Part 53 finalization, becomes more critical as any delays could exacerbate the stock's volatility amid the lawsuit. Ultimately, this adds a layer of non-operational risk that underscores the need for a lower entry price or clearer commercial progress before considering an investment.

Thesis delta

The class action lawsuit does not fundamentally alter the core investment thesis of waiting for binding PPAs or a lower entry price, but it introduces additional legal and reputational risks that could accelerate negative sentiment and increase the cost of equity capital. Investors should now factor in potential litigation outcomes and heightened scrutiny when assessing NuScale's ability to execute on its regulatory and commercial milestones, reinforcing the 'WAIT' rating until clearer de-risking events emerge.