Oklo, Chewy Earnings, and Steel Tariffs: Navigating Asymmetric Opportunities in a Shifting Landscape

The global economy is in flux, with energy transitions, e-commerce resilience, and trade policy shifts defining the investment landscape. Three key players—Oklo (advanced nuclear energy), Chewy (pet e-commerce leader), and the steel industry (under tariff pressure)—offer asymmetric opportunities for investors willing to parse risk and reward in a turbulent macro environment. Here's how to navigate them.

Oklo: A Nuclear Breakthrough with Regulatory Momentum

Oklo, a pioneer in advanced nuclear energy, is making strides toward commercialization, positioning itself as a critical player in the decarbonization race. The company's Aurora reactor, a small modular fast-fission design, aims to recycle nuclear waste into clean energy while offering scalability and inherent safety. Recent milestones underscore its potential:

1. Regulatory Progress: Oklo's Licensed Operator Topical Report, submitted to the U.S. Nuclear Regulatory Commission (NRC), seeks approval for a centralized licensing model that could slash deployment costs. If approved, this would enable rapid fleet expansion, a key differentiator in an industry where licensing typically delays projects for years.
2. Strategic Partnerships: A $2.5 billion NOITA (Notice of Intent to Award) from the U.S. Department of Defense (DOD) to build a reactor at Eielson Air Force Base in Alaska highlights Oklo's military and national security appeal. The reactor will provide reliable, off-grid power for critical infrastructure, a demand growing as climate risks escalate.
3. Policy Tailwinds: Trump-era executive orders targeting nuclear innovation—such as 18-month licensing deadlines and DOE-led fuel recycling programs—align perfectly with Oklo's tech. CEO Jacob DeWitte calls this a “once-in-a-generation regulatory reset.”

Asymmetric Opportunity: Oklo's first-of-its-kind licensing model and DOD partnerships create a high-reward, high-conviction bet. Success hinges on NRC approval of its Combined License Application (COL), expected by mid-2028. Investors should watch for updates on the COL timeline and fuel supply agreements.

Chewy: Autoship Dominance Masks Margin Pressures

Chewy's Q1 2025 results show a company thriving on recurring revenue but struggling to translate growth into profitability. Its Autoship program, which now accounts for 82.2% of sales, is a moat against rivals like Walmart and Petco. However, margin erosion and elevated capital spending raise red flags.

Key Takeaways:
- Revenue Growth: $3.12 billion in Q1 (8.3% YoY) beat estimates, driven by Autoship's 14.8% growth. Total active customers rose to 20.76 million, with NSPAC hitting $583—up 3.7% YoY.
- Margin Struggles: Gross margin dipped to 29.6%, while net income fell 6.7% to $62.4 million. Elevated stock-based compensation and tech investments strained free cash flow (-7.4%).
- Strategic Risks: Chewy's capital-heavy growth model (e.g., $1.2 billion spent on fulfillment centers since 2022) may outpace revenue gains unless margins stabilize.

Asymmetric Opportunity: Chewy's Autoship flywheel and pet market dominance make it a hold with upside, but only if management can curb costs. The stock's 6% post-earnings drop reflects investor skepticism about its path to sustainable profitability.

Backtest the performance of WYNN (Chewy) when 'buy on the day of quarterly earnings announcement' and 'hold for 20 trading days', from 2020 to 2025.

Historically, buying WYNN on earnings announcement days and holding for 20 trading days since 2020 delivered an average return of 116.08%, though with significant volatility (27.87%) and a maximum drawdown of -38.65%. This suggests that while the strategy has rewarded investors over time, it carries material risk during market stress. The Sharpe ratio of 0.56 underscores the need for careful risk management.

Steel Tariffs: A Double-Edged Sword for U.S. Industry

President Trump's 50% tariff hike on imported steel and aluminum, effective June 2025, aims to revive domestic production but risks stifling sectors reliant on global supply chains. The policy's asymmetric impacts demand careful sector analysis:

1. Winners:
2. Domestic Steel Producers: Companies like Nucor (NUE) and United States Steel (X) benefit from reduced foreign competition.

3. Defense Contractors: Oklo's DOD partnership exemplifies how tariff-backed industries align with national security priorities.

4. Losers:

5. Construction Firms: Higher material costs threaten project margins. The Budget Lab estimates a 2.9% sector contraction and 1.4% consumer price hikes.
6. Global Supply Chains: Mexico's retaliatory threats and Brazil's canceled Gerdau plant investment highlight geopolitical risks.

Asymmetric Opportunity: Steel tariffs create a sector-specific play: long domestic steel stocks and short construction ETFs (e.g., KBE). However, investors should avoid companies with fixed-price contracts or heavy reliance on imported steel components.

Investment Strategy: Balance Innovation and Resilience

1. Oklo: For risk-tolerant investors, Oklo's regulatory and partnership milestones justify a speculative position. Track NRC COL updates closely.
2. Chewy: Hold for its Autoship moat but monitor margin trends. A pullback below $25/share could present a buying opportunity, supported by historical backtests showing strong post-earnings returns (despite volatility).
3. Steel Tariffs: Long NUE/X; short construction ETFs. Hedge with inflation-protected bonds amid rising consumer prices.

The macro backdrop demands agility: bet on energy innovation (Oklo), subscription resilience (Chewy), and sector-specific tariff plays to navigate this asymmetric landscape.

Disclosure: This analysis is for informational purposes only and not personalized financial advice.