ITM Power: The Hangover After the MSCI Party as Government Backing Fails to Shield the Stock from a 34% Weekly Rout

Hydrogen stock ITM Power plummets 47% from May peak as hedge funds unwind index-inclusion bets, despite record revenue, £152 million order book, and policy support.

Investors who chased ITM Power’s index-inclusion rally in late May are now nursing heavy losses. The hydrogen specialist’s shares tumbled another 10.68% on Wednesday to close at €1.35, extending the seven-session sell-off to almost 34%. Since the stock hit a peak of €2.58 on 29 May, the decline totals more than 47%.

The mechanics of the move are textbook. Hedge funds and arbitrageurs had piled into ITM Power ahead of its admission to the MSCI UK Small Cap Index, betting that passive index funds would be forced buyers on the effective date. That trade worked brilliantly – the shares more than doubled in the preceding weeks. But once the index funds had completed their mandatory purchases, the speculative money began to unwind its positions. With no fresh buyers at elevated levels, the stock cratered.

Contrasting signals from the real economy

The brutal price action stands in sharp contrast to the company’s improving fundamentals. ITM Power’s first-half revenue for fiscal 2026 hit a record £18 million, and management has lifted the full-year outlook to £40-43 million. The order book has swelled to £152 million, with more than 70% of that backlog considered profitable. Cash is also comfortable: the company expects to end the year with up to £215 million in the bank.

On the policy front, the UK Competition and Markets Authority gave its blessing on 20 May to a £46.5 million state grant – part of a £86.5 million package designed to scale the company’s “Chronos” electrolyser technology. In exchange, Great British Energy taked a 10.8% stake in ITM Power. The capital is earmarked for expanding production capacity at the Bessemer Park site in Sheffield to one gigawatt.

In early June, a strategic partnership with Protium Green Solutions was unveiled, targeting the development of industrial green hydrogen projects starting with the 15-megawatt Cromarty facility in Scotland. A final investment decision on Cromarty is due by December 2026.

Analyst opinions veer wildly

Wall Street remains deeply divided on the stock. Goldman Sachs reiterated its sell recommendation, raising its target only marginally to 63 pence – far below the current market price. Jefferies, by contrast, sees fair value at 200 pence and recommends buying. Berenberg also likes the shares but trimmed its target to 110 pence, while UBS stays neutral. Such a wide dispersion – a factor of three between the highest and lowest targets – suggests the market is pricing in a binary outcome rather than a conventional valuation.

Three catalysts in June

The next major inflection points are concentrated in the coming weeks. ITM Power is awaiting a government decision on funding for the automated Chronos production line. Separately, the results of the second hydrogen allocation round are expected, and Uniper must green-light a separate major project. Jefferies has warned that if the Chronos subsidy falls through, the stock faces a 52% downside risk.

Technical picture offers little comfort

At €1.35, the shares are trading nearly 16% below the 50-day moving average of €1.61. The 200-day line at €1.00 represents the next substantial support level, roughly 26% lower. The relative strength index has slipped to 34, close to oversold territory. Whether the market can look past the near-term noise and refocus on ITM Power’s operational momentum – and the three pivotal June decisions – will determine if the stock finds a floor before that level or continues to spiral. The next scheduled update comes on 15 September with the full-year results, but the fate of the hydrogen business may be sealed before summer is out.