Is it: "That’s real infrastructure, real capital, and a real long-term commitment."?
The 200 acres seems to have been purchased for about $5 million (maybe 2 to 3x market rates for raw land in Pike County, but cool, OKLO owns some land). The development next steps are described as "Pre-construction and site characterization are slated to begin in 2026," (quote from press release), which could be a lot of things but definitely isn't infrastructure actually getting built. And this is likely sub $2 million of spend (e.g., surveys, environmental studies, and preliminary permitting preparation). And the commitment to prepay for electricity will be a payment that will be huge, but will require that something actually get built that can produce electricity. It is a solid transaction, but could very well simply be a "flyer" by Meta that only results in noticeable spend if OKLO actually builds something. Which Oklo says will happen: "with the first phase targeted to come online as early as 2030." And based on history of all nuclear power plant builds in the US over the last 20 years is a target that won't remotely be hit.
Not to be too negative, but if the projects build is $5 billion, is a META spend this year of almost certainly less than $10 million "real capital"? Congrats to Oklo, but it could simply be more talk and promises of things that won't happen.
Excellent post Edward! Looks like it could be a good credit spread trade, but very short term. Just have to wait and see.
Thank you, I think it's worth plotting out for sure
I guess you can tell my preference is credit spreads
Nothing wrong with that
Is it: "That’s real infrastructure, real capital, and a real long-term commitment."?
The 200 acres seems to have been purchased for about $5 million (maybe 2 to 3x market rates for raw land in Pike County, but cool, OKLO owns some land). The development next steps are described as "Pre-construction and site characterization are slated to begin in 2026," (quote from press release), which could be a lot of things but definitely isn't infrastructure actually getting built. And this is likely sub $2 million of spend (e.g., surveys, environmental studies, and preliminary permitting preparation). And the commitment to prepay for electricity will be a payment that will be huge, but will require that something actually get built that can produce electricity. It is a solid transaction, but could very well simply be a "flyer" by Meta that only results in noticeable spend if OKLO actually builds something. Which Oklo says will happen: "with the first phase targeted to come online as early as 2030." And based on history of all nuclear power plant builds in the US over the last 20 years is a target that won't remotely be hit.
Not to be too negative, but if the projects build is $5 billion, is a META spend this year of almost certainly less than $10 million "real capital"? Congrats to Oklo, but it could simply be more talk and promises of things that won't happen.
Th risk is certainly that this is still a concept. If it doesn’t work then what happens to the prepayment by META? Gone?