ASPI Discussion: Long 6,000+ Shares
TLDR: If ASPI’s technology is truly what they say it is – this could be a 100x stock. Which wouldn’t be crazy given a $400M market cap currently (growing to $40B would be 100x). They could be one of the few Western providers of HALEU to fuel the West’s nuclear ambitions while deploying absurdly low capex. Not to mention potential revenue coming from the nuclear medicine and semiconductor fields (although I think the true homerun is with HALEU). However, if their technology isn’t as powerful as they say it is, this could be a true nothing-burger. Regardless, it is a bet I am willing to take. Currently long 6,850 shares and looking to add more.
Bullish Points:
• Potential to Lower Isotope Costs: ASP Isotopes has the potential to significantly reduce the cost of isotope enrichment through its proprietary Quantum Enrichment (QE) technology, which is more efficient and less expensive than traditional methods like centrifugation. The company's Aerodynamic Separation Process (ASP) is also comparable in efficiency to traditional centrifugation but at a much lower cost.
• Countering Russian Dominance: ASP Isotopes could help the West reduce its reliance on Russia for uranium supply, particularly for HALEU, which is crucial for next-generation reactors. This is especially important given geopolitical concerns and the US government's efforts to establish a domestic supply chain.
• HALEU Fuel Production: The company's technology is positioned to supply HALEU fuel for next-generation Small Modular Reactors (SMRs), which are expected to drive nuclear industry growth. ASP's technology could be a low-cost platform to enhance HALEU production. Costs could be as low at $10M to cerate a QE plant to enrich uranium as compared to traditional centrifugation which costs in the $Billions. This alone is – if the technology is truly legit – could be massively impactful for the company and the whole industry. I believe the CEO, Paul Mann, wants to spin out QLE (the portion of the business that will work on enriching Uranium (HALEU) for nuclear energy. Need to keep an eye on this and how exactly that will/would affect the mechanics of owning shares in ASPI. But either way for now, the nuclear business is wrapped up with $ASPI.
o Per the company’s website: “ASPI recently entered into a Term Sheet with TerraPower LLC which contemplates TerraPower providing funding for the construction of a HALEU Facility and TerraPower purchasing HALEU produced at the facility.” TerraPower is a Bill Gates backed Nuclear company. So I would assume at least Bill Gates thinks ASPI’s technology is worth taking a risk on partnering on. This happened on 11/14/24 btw, so old news.
• Diverse Isotope Applications: ASP Isotopes' enrichment technologies can produce a variety of isotopes for use in nuclear energy, nuclear medicine, and semiconductors, offering diverse revenue streams. The company already has supply contracts in place for isotopes such as molybdenum-100, carbon-14, and silicon-28.
• Vertical Integration: With the acquisition of PET Labs, ASP Isotopes has the potential to become a vertically integrated radioisotope supplier, creating feedstock isotopes for its medical arm. I’m not sure how big of an opportunity this could be but they do produce YT-176 which is the isotope used by Novartis’s Pluvicto (prostate cancer treatment). Well technically I think they convert the YT-176 to YT-177 for treatment, but you get the point. For this drug alone reached ~$1B in 2023. ASPI announced construction of a YT plant on 9/3/24 according to their website.
• Attractive Takeover Target: If the company demonstrates commercial production at scale, it could become an attractive acquisition target for larger companies. I don’t invest hoping for a takeover, but given the small market cap of this company, (~$400M at last check), any big-name utility or hyperscaler could easily buy them out just for their tech.
• Proprietary Technology: ASP Isotopes possesses two novel, proprietary enrichment methods: the Aerodynamic Separation Process (ASP) and Quantum Enrichment (QE). I’m not an expert on their technology of course, but I believe it is proprietary to them. Would love to hear more on this as the whole thesis hangs on them being different and being able to construct plants at very low costs (especially for HALEU).
• Strategic Locations: The company is expanding into Iceland, which is attractive for its low energy costs, regulatory support, and proximity to a major shipping port. They will also add plants in South Africa.
• Government Support: The US government is actively working to establish a domestic supply chain for nuclear fuel, which is a positive sign for ASP Isotopes. It does worry me that they aren’t a US company, but building in SA and Iceland for now would be considered friendly and the US could do business with them. We know this given TerraPower has begun working with the company.
• Established Operations: ASP has already commissioned a small-scale plant and has commercial contracts. For now, revenue is still miniscule, but hopefully this will change soon.
Bearish Points:
• Commercial Scale Risk: While the company's technology has been proven in the lab (so they claim), the ability to scale up to commercial production has yet to be demonstrated. There is a risk that the company will not be able to reach commercial scale after successful lab trials.
• Political Risk in South Africa: The company's operations in South Africa may be subject to political risk, including the potential for unforeseen curtailments around the proliferation of enrichment technologies. This risk also includes concerns about the ability to export isotopes from South Africa.
o I’m also worried about a Trump administration for ASPI. I’m not sure if this will be beneficial for them or not. Nuclear is bipartisan (one of the only areas that Congress agrees on), and while normally I would think friendly relations with Russia/Putin would be a good thing for the USA and the world, if relations get too friendly, it is possible Trump opens up trade again with Russia. This would definitely hurt ASPI’s growth potential.
• Regulatory Approvals: ASP Isotopes needs to obtain necessary government approvals and permits in South Africa for HALEU production, as well as in other countries like Iceland and for other end markets. I think they will be able to do this, but honestly idk how government regs and approvals work.
• HALEU Demand Risk: The demand for HALEU fuel is dependent on the US Nuclear Regulatory Commission (NRC) approving HALEU-based SMRs, which is not yet a certainty. $SMR has an approved SMR but doesn’t really have any legit customers yet (I’m also long $SMR and $OKLO). I do think the NRC will give approvals but I am unsure about the timeline. But if approvals do come, ASPI is in a great position to be a Western provider of HALEU.
• Balance Sheet/Liquidity Concerns: The company may need additional capital to execute its ambitious growth plans. In fact that is probably a certainty that dilution is on the board in the future. Maybe they can get more contracts with customers who will partner and help fund some of the costs of capex, but who knows. That would also come with some sort of downsides like being locked into only selling HALEU to that customer/partner for a certain amount of time (like the TerraPower deal).
• Competition: While the company claims its technology is superior to traditional methods and has lower costs, it faces competition from existing players in the nuclear fuel and isotope enrichment industry. Again, not an expert on this, but figured I’d note it again as it came to mind and is a huge risk.
• Shorts Taking Aim: Some group called “Fuzzy Panda” put out a short report in late Nov 2024 that rocked the stock (fell from $8 to $4 in like 2 weeks). While I think this anonymous group called “Fuzzy Panda” made a bag shorting this stock, and they do bring up a couple legitimate concerns, I ultimately think the stock will shake this off. TerraPower (backed by Bill Gates) gives me some hope that the company is legit. Regardless, the stock is in the cross-hairs of the shorts right now which will add to the volatility of this already volatile stock.