Nel ASA's Cost-Slashing Electrolyzer Fails to Stem Order Slump as Rally Hits Resistance

Nel ASA's new electrolyzer promises cheaper green hydrogen, but Q1 orders plunged 73% and cash burn accelerated, triggering profit-taking after a 52-week high.

Nel ASA's shares have surged more than 75% since the start of the year, fueled by the unveiling of a new generation of pressurized alkaline electrolyzers that promises to halve the cost of green hydrogen production. But beneath the optimistic surface, the company's first-quarter numbers tell a more sobering story: order intake collapsed 73%, the order backlog shrank by nearly a quarter, and cash burn accelerated.

The tension between technological promise and commercial reality came to a head on Tuesday. After hitting a 52-week high of €0.36 in Frankfurt on Monday — a level not seen in a year — the stock retreated sharply, losing around 7.6% to settle at €0.33. The dip was accompanied by heavy volume: over 11 million shares changed hands on the Oslo exchange alone, suggesting active repositioning by investors who had ridden the rally from its March lows near €0.18.

A Breakout That Didn't Stick

The move lower followed a technically significant event on Friday. Nel's shares jumped nearly 15% on the Oslo bourse, briefly breaking above the key resistance level of 3.615 Norwegian kroner. However, the stock failed to close above that threshold, settling at 3.575 kroner by Friday's end. Technical analysts point to a fresh buy signal from the Stochastic RSI, yet the failure to hold the breakout casts doubt on the strength of the momentum.

With a 30-day annualized volatility north of 100%, Nel remains a vehicle for risk-tolerant traders. The stock now trades more than 60% above its 200-day moving average, a stretched position that often invites profit-taking. For anyone who bought in March around €0.18, the paper gain is approaching 90% — a powerful incentive to lock in profits.

Thinning Backlog, Bleeding Cash

Nel's first-quarter results, released on May 6, show a company in transition. Contract revenue slipped 5% from the prior year to 148 million Norwegian kroner. The EBITDA loss narrowed slightly to minus 100 million kroner from minus 115 million, but operating cash flow worsened sharply to minus 165 million kroner — more than double the prior year's outflow.

Most concerning is the order book. New orders during the quarter totalled just 85 million kroner, down 73% from a year earlier. The total backlog shrank 24% from the previous year to 1.1 billion kroner. While Nel holds a liquidity reserve of 1.4 billion kroner, providing a buffer of roughly 18 months at the current burn rate, the trajectory is clearly negative.

The Technology Bet That Hinges on Orders

What continues to attract investors is Nel's new pressurized alkaline electrolyzer platform, unveiled earlier this month after more than eight years of development at the Herøya site in Norway. The company targets turnkey costs below $1,450 per kilowatt for a 25-megawatt installation — roughly half the industry average that often exceeds $3,000 per kilowatt. If achieved, that cost advantage could reshape the economics of green hydrogen and open up large-scale projects that were previously uneconomic.

But the market is waiting for proof. The technology milestone has yet to translate into a meaningful uptick in order intake, and the shrinking backlog suggests that existing projects are being completed without sufficient replacement. Until Nel can announce major new commercial contracts, the stock's rally rests on anticipation rather than execution.

What Comes Next

For now, Nel is caught between two narratives. One points to a potentially transformative product that could give the company a competitive edge in a rapidly growing market. The other highlights a deteriorating order book, accelerating cash burn, and a stock that has tripled since March on hopes alone. The next few quarters will determine which story wins out. If the new platform starts converting into contracts, the current valuation may prove cheap. If not, the technical correction that began on Tuesday could have further to run.