ITM Power: The £46.5m Question That Could Define Its Growth Trajectory

ITM Power shares swing on rival's earnings and short squeeze; focus shifts to UK subsidy verdict on May 26 that will decide Chronos production line future.

The past week has laid bare the two-speed nature of ITM Power’s stock. On Tuesday, a grim earnings report from rival ThyssenKrupp Nucera dragged the shares down nearly 4% to 156.80 pence, only for a furious rebound on Wednesday to push them as high as 178.40 pence on heavy volume. Beneath that headline volatility, however, lies a far more consequential question: will the British electrolyser maker secure the £46.5m subsidy needed to unlock its next-generation Chronos production line?

That decision is now just weeks away. The UK’s subsidy watchdog is due to deliver its verdict on the grant on 26 May, and if the answer is positive, management plans to take a final investment decision in June. The entire Chronos platform — designed to deliver 2-megawatt units at 40% lower cost than the current Trident systems — depends on that green light. The factory in Sheffield is targeting 1 gigawatt of annual capacity by 2028.

The panic triggered by ThyssenKrupp Nucera’s second-quarter revenue slump to €50m proved short-lived. Wednesday saw the stock trade in a wide band between 167 and 178.40 pence, erasing the previous day’s losses. Market participants pointed to a short squeeze as part of the move: ITM Power remains a favourite among institutional shorts, with a reported short interest of nearly 3%. Helikon Investments holds a net short position of 1.54%, and Qube Research & Technologies accounts for another 0.68%. As the stock tested key support levels, some of these bears were forced to cover, accelerating the recovery.

Yet the rally masks a clear divergence among investors. Retail shareholders have been taking profits aggressively. On AJ Bell’s platform, ITM Power was the most sold stock on a recent day when the price dipped to 143.30 pence on volume of 13.2m shares — well above the daily average. Since January the stock has roughly 160% higher, and at one point it had jumped about 400% from a year earlier. For private traders, that was enough to cash out.

Institutional investors, by contrast, are holding their nerve. Their focus is on the broader financing package that already includes £86.5m in total firepower: £40m of equity from Great British Energy, plus a state grant for Chronos. The company’s balance sheet offers plenty of runway — roughly £198m in cash and no debt. Jefferies estimates that gives management breathing room at least until 2028.

Analyst opinion remains sharply divided. Jefferies has lifted its price target from 115p to 200p, while Morgan Stanley upgraded the stock to “Overweight” with a 170p target. Morgan Stanley sees operating break-even in reach if ITM can secure around 200 megawatts of new orders, and it forecasts EBITDA of £13m for fiscal 2028. UBS, however, sticks to a “Neutral” rating and a target of just 60p, arguing the valuation has run far ahead of the fundamentals. The order book stands at £152m, but the pre-tax loss widened to £45.4m in the latest financial year.

Beyond Chronos, the Humber H2ub project with Uniper provides another potential catalyst. Uniper received planning approval in March for its Killingholme facility, and ITM has already signed the FEED contract and is due to supply six POSEIDON modules. The project targets commercial operation by 2029. Morgan Stanley expects multiple triggers in 2026, including the results of the UK’s Hydrogen Allocation Round 2 and a final investment decision on Humber.

CEO Dennis Schulz has tied his own compensation to Chronos milestones, and management has raised its full-year revenue guidance to more than £40m. But the immediate trajectory depends on that 26 May decision. If the grant comes through, ITM can accelerate the commercial rollout of its next-generation electrolysers. If not, the start of series production slips, and the stock remains hostage to the mood swings of the hydrogen sector. For now, the shares are a bet on timing, subsidies, and trust — and the next big clue comes in less than three weeks.