ITM Power: A £46.5m Grant Decision and Two Major Project FIDs Could Redefine the Hydrogen Stock's Trajectory

ITM Power shares fell 27% on sector contagion, Goldman's sell rating, and macro headwinds, but still up 131% YTD. Analysts split as fundamentals improve with £40M investment and record revenue.

ITM Power’s shares have just endured a savage weekly selloff, shedding more than a quarter of their value as sector contagion, arbitrage unwinding, and macro headwinds converged. But for a stock that still sits on a 131% year-to-date gain, the question is whether that rout was a mere correction or the beginning of a deeper trend reversal.

The company lost 14.45% on Friday alone, closing at €1.68, bringing the seven-day decline to 26.75%. The catalyst was a triple hit: a damaged electrolyser at a rival, a reaffirmed sell rating from Goldman Sachs, and a stronger-than-expected US jobs report that reinforced the case for higher?for?longer interest rates.

Clean Power Hydrogen triggered the sector scare when it suspended trading after a pilot electrolyser suffered irreparable damage. Doubts about the technological maturity of the entire industry resurfaced instantly. Ballard Power Systems tumbled 19%, Plug Power shed roughly 12%, and ITM Power was dragged down in sympathy. The selloff intensified when the US reported 172,000 new jobs in May, fuelling expectations that the Federal Reserve will keep rates elevated. Growth and clean?tech stocks globally came under pressure, and London’s AIM All-Share index fell 1.4%.

The week’s damage was compounded by a mechanical factor. ITM Power’s inclusion in the MSCI UK Small Cap index at the end of May had prompted hedge funds and arbitrageurs to position for passive ETF inflows. When those positions were unwound, the selling pressure multiplied.

Against that backdrop, Goldman Sachs reiterated its “sell” rating on Friday, nudging its price target only marginally from 55 pence to 63 pence — still well below current trading levels. The bank’s analysts argue that ITM Power remains fundamentally overvalued and that near?term profitability is unlikely.

Other houses take a starkly different view. Jefferies kept a “buy” rating and lifted its target to 200 pence from 115 pence. Berenberg is also a buyer, with a target of 110 pence. Morgan Stanley now expects EBITDA breakeven in the 2028 financial year, a year earlier than previously forecast. UBS sits in the middle with a “neutral” recommendation and a 60?pence target. The disagreement centres not on the technology itself but on the pace of commercialisation, valuation, and cash?burn trajectory.

While the share price was getting pummelled, the company’s fundamentals took a notable step forward. Great British Energy invested £40 million for a 10.4% stake, making it the second?largest shareholder. That injection, combined with a £46.5 million government grant for automating ITM’s Sheffield factory, has lifted the expected net liquidity range to between £210 million and £215 million.

Operationally, the first half of fiscal 2026 produced record revenue of £18 million. The full?year forecast was raised to £40 million?43 million, representing 35% year?on?year growth. The EBITDA loss narrowed from £16.8 million to £11.9 million in the half, and the full?year loss is expected to land between £27 million and £29 million. The newly formalised partnership with Protium Green Solutions for industrial hydrogen projects in Britain — including the 15?megawatt Cromarty development in Scotland — offered no support to the stock. A final investment decision for Cromarty is not expected until December 2026, and binding offtake agreements are still lacking.

All attention now turns to a series of decisions packed into the next few weeks. The most critical is the approval by Britain’s Competition and Markets Authority of the so?called Chronos grant — the £46.5 million for the next electrolyser production line. Management has made clear that it will only commit to the Chronos investment after the grant is confirmed. Jefferies warns that a negative outcome carries a 52% downside risk for the stock. If the green light comes, construction of a fully automated one?gigawatt production line in Sheffield will begin, with technology designed to cut capital costs by 40%.

Alongside Chronos, the second UK hydrogen auction round HAR2 offers up to 875 megawatts of capacity. ITM Power is already listed as the preferred supplier for two of the 27 shortlisted projects, though those are still contingent on final investment decisions by the respective developers.

A third big catalyst is Uniper’s Humber H2ub project at Killingholme, for which ITM Power is set to supply six Poseidon modules in the initial phase. Uniper is expected to take its final investment decision this month as well.

All three of those milestones — the Chronos grant, the HAR2 signals, and the Uniper decision — are due before the company’s next annual results on 15 September. If the decisions land positively, the year?to?date rally gains a solid foundation. If confirmations fail to materialise, the 200?day moving average at €0.99 could come into play again.

For now, ITM Power is a study in contrasts: a stock that lost a quarter of its value in a week, yet has a balance sheet strengthened by a state investor, a clear pipeline of potential contracts, and a defining month ahead.