Investors watching ITM Power’s stock slide from its late-May peak might be forgiven for missing the broader picture. The hydrogen specialist has lost nearly 43% of its value since hitting a 52-week high of €2.58 on 29 May, closing Friday at €1.48. Yet beneath the surface of that brutal correction lies a project pipeline that is thickening fast, underpinned by a fresh wave of European Union subsidies worth €1.3 billion.
The EU Commission on 9 June gave the green light to a German state aid package for green hydrogen production, channelled through the European Hydrogen Bank’s auction mechanism. That decision dovetails with earlier approvals for Berlin’s industrial electricity price scheme, which caps power costs at €0.05 per kilowatt-hour and now carries a total envelope of €3.8 billion through 2028. For ITM Power, which is the technology partner in the “Netzbrücke” projects led by Stablegrid Group, the timing could hardly be more relevant. Those developments include a 30-megawatt green hydrogen plant in Rüstringen and a planned 680-megawatt electrolyser complex, both designed to absorb surplus wind power for grid stabilisation. A final investment decision on the smaller unit is expected before the end of the year.
The company’s own balance sheet is also being shored up by government support. In April, the UK government pledged £86.5 million to build a new automated manufacturing line with a target capacity of one gigawatt of electrolysers per year. That factory, combined with a recently lifted revenue forecast of £40 million to £43 million for the current fiscal year — backed by an interim result of £18 million — suggests the commercial engine is gaining traction.
So why the sell-off? The trigger was mechanical rather than fundamental. ITM Power’s admission to the MSCI UK Small Cap Index at the start of June forced passive funds to buy up to $30 million worth of stock. Speculators who had accumulated shares in anticipation of that event then dumped their holdings immediately after the index inclusion, creating a wave of profit-taking that knocked the stock down some 30% in two weeks. The high from which the shares have fallen now stands at €2.58, making the current slide a 42.5% retreat from that record.
Should investors sell immediately? Or is it worth buying ITM Power?
Analyst opinion remains divided. Goldman Sachs maintains a sell recommendation with a price target of just 63 pence, arguing that the current valuation has run far ahead of the path to profitability. Morgan Stanley, by contrast, sees upside to 170 pence and continues to back the stock. Operationally, ITM Power added a strategic partnership with Protium Green Solutions in June to develop industrial green hydrogen plants, further expanding its reach.
Technically, the shares are hovering in a zone that often attracts bargain hunters. The relative strength index stands at 39.5, just shy of levels many traders consider oversold. The stock is roughly 10% below its 50-day moving average of €1.64 but remains comfortably above the 200-day average of €1.01 — a line that has served as a key support level throughout the year and now provides a chartist’s floor at roughly 30% below the current price.
With no near-term earnings releases or shareholder meetings on the calendar, the next catalyst will be whether the new EU funding accelerates the investment decisions on the Netzbrücke projects, thereby securing a multi-year order book for ITM Power’s electrolysers. The stock may have been battered by index arbitrage, but the state-backed tailwinds blowing from both London and Brussels suggest the story is far from over.
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