ITM Power: Profit-Taking Sets In After a Staggering 450% Climb

ITM Power shares retreat from 166p peak as investors cash in, despite £86.5M government backing and Rheinmetall deal. Analysts split on valuation.

The hydrogen sector is a study in contrasts this spring, but few stocks have delivered a ride as dramatic as ITM Power. After surging from penny-stock territory around 30 pence to a multi-year high of 166.50 pence, the shares are now giving back some of those spectacular gains as investors cash in their chips.

The sell-off has been pronounced. On the AJ Bell platform, ITM Power was the most-sold stock last week, accounting for roughly one in every 50 sell orders. The shares also featured prominently among the top 10 most-traded names at interactive investor on Tuesday morning. Market observers see this as textbook profit-taking following a rally that has lifted the company’s market capitalisation back above £1 billion.

The stock has settled in a range between 130 and 135 pence, still a far cry from its sub-50-pence levels of a year ago but well off the recent peak. The pullback has been particularly painful for latecomers who bought into the April frenzy.

The Catalysts Behind the Surge

ITM Power’s meteoric rise did not happen in a vacuum. The company secured a government funding package worth £86.5 million in early April, comprising a strategic investment from Great British Energy and a grant from the Department for Energy Security and Net Zero. The funds are earmarked for the “Chronos” project, which aims to build a new automated manufacturing line for electrolyser stacks.

That state backing was followed by a strategic partnership with Rheinmetall to develop plants producing synthetic fuels for NATO applications. The announcement, made in mid-April, sent the Xetra-listed shares soaring by nearly 35% in a single session on volumes many times the daily average.

The Valuation Conundrum

Despite the operational progress, the stock’s valuation has left analysts divided. Berenberg has raised its price target to 110 pence and maintains a “Buy” rating, supported by seven buy recommendations against four holds. The consensus 12-month target sits at around 99 pence — well below the current trading level.

UBS is more cautious, pegging fair value at around 60 pence, citing persistent losses and the long road to profitability. The numbers bear that out: ITM Power reported revenue of just under £49 million and a net loss exceeding £28 million in its most recent financial year. Management has since raised its revenue guidance for the current year to up to £43 million, with an adjusted operating loss of no more than £29 million.

Still, the company’s balance sheet has been transformed. Net cash at year-end is expected to reach as much as £215 million, a sharp upward revision from earlier estimates, thanks to the government injection.

A Sector in Motion

ITM Power is not the only hydrogen stock navigating volatile waters. Bloom Energy reports its Q1 results after the close today, with expectations sky-high after a 166% year-to-date rally driven by AI data centre demand. SunHydrogen has opened an office in Austria, appointing industry veterans to spearhead its European push. SFC Energy is riding a defence-driven recovery, with shares up 47% from their November low. And EcoGraf is inching toward a $105 million financing decision from KfW IPEX-Bank for its Tanzanian graphite project.

But ITM Power’s trajectory encapsulates the sector’s central tension: genuine operational milestones are being achieved, yet the market’s enthusiasm has pushed valuations ahead of fundamentals. The Rheinmetall deal and government backing add a credible defence angle to the classic electrolyser story, but the real test will be whether these partnerships translate into meaningful revenue.

For now, the stock is consolidating. Whether this is a pause before the next leg up or the beginning of a deeper correction depends on how quickly ITM Power can turn its strategic pivots into cash flow. The Q1 figures, due at the end of April, will provide the first concrete evidence.