NuScale Faces Securities Fraud Lawsuit Amid Stock Plunge and ENTRA1 Uncertainty

What happened

A class action lawsuit has been filed against NuScale Power Corporation for securities fraud following a 12% stock drop linked to ENTRA1 issues, as announced by law firm Bleichmar Fonti & Auld LLP. This legal challenge emerges as NuScale remains pre-commercial with no binding module delivery contracts and a -$199.9M LTM free cash burn, per SEC filings, highlighting its reliance on equity funding. The company's financial strain is compounded by Fluor's ongoing stake monetization, set to complete by end-Q2 2026, and unusual insider sales by Fluor Corp that have contributed to share overhang. Despite regulatory progress such as NRC Part 53 finalization, commercial execution lags with ENTRA1 partnerships yet to yield binding PPAs or concrete orders, leaving the equity story fragile. Investors now face intensified risks from both legal scrutiny and operational delays, underscoring the gap between narrative hype and tangible execution.

Implication

The lawsuit introduces a legal overhang that could further depress stock prices, increasing the cost and dilutive impact of future equity raises needed to fund operations. NuScale's cash burn, with -$199.9M LTM free cash flow, necessitates ongoing access to capital markets, which may be constrained by negative sentiment and regulatory scrutiny from the fraud allegations. Key near-term catalysts, such as ENTRA1 binding PPAs and Fluor's stake monetization, are now overshadowed by legal proceedings, potentially delaying any positive momentum or de-risking events. Regulatory milestones like NRC Part 53 finalization remain important but are insufficient to justify the current valuation without evidence of commercial progress, such as contracted module counts or bankable PPAs. In this environment, maintaining a cautious 'WAIT' stance is advisable until clearer signs of contracting emerge or the stock reaches a more attractive entry price, such as $10, to compensate for these compounded risks.

Thesis delta

The existing thesis to wait for binding PPAs or a lower entry price remains unchanged, but the lawsuit adds a layer of legal risk that could accelerate downside scenarios. Monitoring legal developments alongside commercial milestones is now critical, as any prolonged litigation or adverse findings may worsen funding terms and investor sentiment, reinforcing the need for patience.