ITM Power's Post-MSCI Pause Puts the Focus on a Make-or-Break June for Hydrogen Ambitions

ITM Power shares fell 7% after MSCI index entry sell-off; focus shifts to £86.5M GB Energy contract and critical Chronos FID decision in June.

The market’s attention on ITM Power last week was almost entirely consumed by the mechanics of its MSCI United Kingdom Small Cap Index entry — a move that ended in a textbook sell-the-news reversal. Yet buried beneath the volatility was a state-backed order from Great British Energy worth £86.5 million, a piece of positive news that barely registered as traders fixated on the index rebalancing. Now, with the index catalyst spent, that contract — along with three pivotal decisions due in June — will determine whether the stock can regain its footing or slide deeper into correction territory.

MSCI euphoria evaporates as short sellers thin out

The path into the MSCI index had been a steep one. Shares climbed from 157.4 pence to an intraday high of 219.8 pence between the announcement and the effective rebalancing date. But on Friday, 29 May, passive index funds executed their mandatory purchases in the closing cross, creating a liquidity spike that hedge funds used to close out short positions. The result was a sharp reversal: ITM Power closed 7 per cent lower at 194.40 pence, effectively wiping out all gains from the index inclusion.

The retreat was largely technical rather than fundamental. A support zone between 170 and 180 pence, established in May, has held multiple tests, suggesting the sell-off is more about positioning than a shift in business outlook. Short sellers had already been scaling back well before the index event. Aggregate disclosed short positions now stand at 1.77 per cent of issued capital. Helikon Investments trimmed its bet from 1.46 per cent in mid-May to 0.97 per cent, while Qube Research & Technologies fell below the FCA’s 0.5 per cent reporting threshold and has disappeared from public registers altogether. With short interest declining, the mechanical tailwind from short covering has largely dissipated, leaving fundamental catalysts to drive the next move.

Chronos decision looms as the most consequential June catalyst

Of the three decisions on ITM Power’s near-term calendar, the final investment decision on the Chronos programme carries the highest stakes. The next-generation electrolyser unit delivers 2 megawatts of capacity — triple that of its predecessor — with 40 per cent lower capital costs and half the physical footprint. The company’s new factory in Sheffield, designed for a full 1 gigawatt of annual capacity, has already secured a £46.5 million grant from the UK energy ministry, payable across fiscal years 2026/27 and 2027/28. Commercial production is targeted for 2028.

Analysts at Jefferies have warned that a negative FID on Chronos could wipe 52 per cent off the share price. Despite that risk, the bank maintains a Buy rating with a 200 pence price target, arguing that the upside from a positive decision outweighs the downside. For ITM Power, the Chronos programme is not just a product upgrade — it is the linchpin of the company’s transition from loss-making legacy contracts to a scalable, profitable manufacturing model.

Hydrogen allocation and Uniper’s green light add further weight

Alongside the Chronos decision, the UK government is expected to announce results from the second Hydrogen Allocation Round. Twenty-seven projects have made the shortlist, among them Uniper’s Humber H2ub project in Killingholme. ITM Power has already been named as the electrolyser supplier for the first 120-megawatt phase, with six 20-megawatt Poseidon modules. A further expansion beyond 200 megawatts is possible. Uniper’s own final investment decision is expected later this year, with planning permission already granted. The government has said contracts will be awarded by the end of 2026, but signals could come as early as June.

Internationally, the REFHYNE2 project — a 100-megawatt electrolyser destined for Shell’s Rheinland refinery complex near Cologne — continues to build momentum. At the World Hydrogen Summit 2026 in Rotterdam, the project collected two awards. The plant is scheduled to begin producing up to 44,000 kilograms of renewable hydrogen per day from 2027, potentially providing a reference case for future large-scale industrial adopters.

Financials improve but profitability remains distant

ITM Power’s interim results for the first half of fiscal 2026 showed a record revenue of £18 million. Management now expects full-year sales of £40 million to £43 million, marking a roughly 35 per cent increase from the prior year. The order book stands at £152 million, with 71 per cent of those orders classified as profitable — a stark improvement from the loss-making contracts that weighed on earlier periods.

Still, the bottom line remains deep in the red. The underlying EBITDA loss is projected between £27 million and £29 million, while the pre-tax loss widened to £45.4 million. Morgan Stanley does not anticipate an operating profit before 2028 and cautions that even that timeline requires near-perfect execution. Cash reserves are expected to finish the year at between £170 million and £175 million, bolstered by the Great British Energy order and existing funds, giving the company sufficient runway to fund its transformation without near-term capital raising.

Analyst views diverge wildly on fair value

The spread in analyst price targets underscores the uncertainty surrounding ITM Power’s trajectory. Jefferies recently lifted its target from 115 pence to 200 pence while retaining a Buy rating, citing higher earnings expectations and lower discount rates. Morgan Stanley upgraded the stock to Overweight — the first positive rating on a British hydrogen name since 2021. Berenberg also remains a buyer, although its price target sits at just 110 pence. UBS is neutral at 60 pence. Of the analysts covering the stock, seven rate it a Buy, four a Hold, and only one a Sell.

What comes next

ITM Power is due to report full-year results on 15 September 2026. By then, all three June decisions — the Chronos FID, the HAR2 outcome, and Uniper’s green light — should have landed, giving the market a far clearer view of whether the company’s growth story is on track. Until then, the post-MSCI consolidation leaves the stock at a level where the next directional move will be determined not by index flows, but by the operational milestones the company can finally deliver.