One news headline this week had a whiff of déjà vu about it. Nuclear startup Deep Fission announced it was going public, hoping to garner investor support to build subterranean reactors to power AI data centers. Wait, didn’t I already write that story? Oh right, I did. Last September, Deep Fission said it had gone public via a reverse merger with Surfside Acquisition, a Delaware shell company, raising $30 million at $3 a share. Now it’s seeking $157 million in a Nasdaq IPO at $24 to $26 a share. You can see my confusion.
Turns out the previous public listing was public in name only. The reverse merger was completed, making Deep Fission a reporting company with SEC obligations, but its stock never actually traded. The company had said it intended to list on the OTCQB, but searches don’t return any results, and the company denied its stock had ever been publicly traded. Deep Fission declined to comment, citing the quiet period before its IPO.
The new offering on Nasdaq would value the company at up to $1.66 billion - a sizable figure for a company that one year ago was struggling to raise a $15 million funding round. Stranger still, the S-1 filed on May 20 paints a bleaker picture than the December filing. Its timeline for turning on its first reactor has slipped. Back in December, it hoped to achieve criticality - the point at which a nuclear chain reaction becomes self-sustaining - by July 2026. Now, it won’t provide an estimate. Deep Fission does point out it is drilling a test well. It has also lost a lot of money.
One thing hasn’t changed: The new S-1 contains the same “going concern” warning. If Deep Fission doesn’t complete the IPO, it could run out of money in the next 12 months. The startup’s financial position has worsened: as of March, its deficit grew to $88.1 million from $56.2 million. In the last month and a half, cash and equivalents declined by $6.4 million, or about 7%.
On the technical front, Deep Fission says it is now prioritizing drilling, perhaps a tacit admission that making holes in the ground isn’t as easy as it sounds. The company started drilling the first of three test wells in March. The well will collect data “up to 6,000 feet deep.” At eight inches in diameter, it’s quite a bit smaller than what will be needed at commercial scale. Deep Fission says it will need boreholes 30 to 50 inches in diameter and a mile deep, though it hasn’t settled on a specific dimension yet. Until it knows how large of a hole it can drill, it’ll have a hard time finalizing its reactor design.
So what has changed since December to spur a bigger offering at a nine-figure valuation? The company did receive an $80 million equity investment, including $20 million from data center developer Blue Owl, which also signed a non-binding MOU for future power plants. Still, that wasn’t enough to stave off the going concern warning. It’s possible Deep Fission is sitting on some positive information omitted from the S-1, though that’s hard to believe given what’s riding on the IPO. It’s more likely the company and its backers are seeking to capitalize on investor excitement over fission power. Just last month, nuclear fission startup X-energy went public in an upsized IPO. But unlike Deep Fission, X-energy is generating revenue and is significantly farther along in the Nuclear Regulatory Commission’s licensing process - a contrast that serves as a useful reminder that in a sector where enthusiasm can run well ahead of technical and regulatory reality, valuation and progress aren’t the same thing.