NuScale Power Faces Securities Fraud Lawsuit Over ENTRA1, Escalating Legal and Credibility Risks

What happened

A securities fraud class action lawsuit alleges NuScale Power misled investors about the ENTRA1 program, a key collaboration with TVA for deploying up to 6 GW of SMRs. ENTRA1 is central to NuScale's strategy to convert AI-driven demand narratives into binding, financed projects, as highlighted in recent filings. The company remains development-stage with significant cash burn, relying on equity issuances like a $475.2M ATM in Q3 2025, and lacks any disclosed binding contracts. The lawsuit follows a stock drop, reflecting growing skepticism over NuScale's ability to secure funded milestones without concrete progress. This legal action introduces new uncertainty that could delay partner negotiations and intensify scrutiny on management's disclosures.

Implication

Legal proceedings may divert management attention and resources from critical project development, delaying key milestones like Romania's FID. Potential settlements or penalties could strain NuScale's liquidity, already dependent on equity with $753.8M in cash but a -$199.7M free cash flow. The allegations might erode partner and customer confidence, making it harder to finalize deals for ENTRA1 or other programs. If fraud is proven, regulatory sanctions could damage NuScale's reputation and access to capital markets. Investors should monitor the case closely, as it adds a layer of risk that could trigger further dilution or project slippage beyond the existing overhang from Fluor's share sales.

Thesis delta

The DeepValue report's WAIT thesis, centered on observing binding contracts within 6-12 months, is now compounded by legal risk from the securities fraud lawsuit. This shift introduces credibility concerns, suggesting management's disclosures around ENTRA1—a critical catalyst—may be unreliable, increasing the probability of extended delays or contract failures. Investors must weigh this added uncertainty against the already high bar for project conversion, potentially lowering conviction in near-term upside.