The Battle for ITM Power: Institutions Pile In as Retail Investors Head for the Exits

ITM Power shares hit multi-year highs as institutional investors buy, but retail investors cash out. Record revenue and a £46.5M grant decision loom.

A stark divide is playing out in the shares of hydrogen specialist ITM Power. While heavyweight institutional investors have driven the stock to multi-year highs, individual shareholders are using the rally to cash out in droves. The tension between the two camps has created extraordinary trading volumes, with more than 13 million shares changing hands in a single session — a spike of 168 percent above the daily average.

The stock touched 174.80 pence this week, propelled by a flurry of bullish analyst calls. Jefferies upgraded the shares to "Buy" and set a price target of 200 pence, citing falling capital costs and a rock-solid balance sheet. The company carries no debt and holds roughly £198 million in cash, providing a runway that management says extends at least through 2028. Morgan Stanley followed suit with its own buy recommendation, nearly tripling its target to 170 pence and flagging the potential for an operational breakeven by fiscal 2028.

Yet not everyone is convinced. UBS has held firm with a 60 pence target, warning that the stock is pricing in a future that has yet to materialise. At a price-to-sales ratio of around 38, the valuation has, in the Swiss bank's view, run far ahead of fundamentals.

Record Revenue, But Losses Widen

The operational picture offers ammunition to both sides. In the first half of fiscal 2026, ITM Power posted a record £18 million in revenue, and management has raised its full-year forecast to as much as £43 million. The order book has swelled to £152 million, with the company now classifying the majority of its contracts as profitable.

But the bottom line tells a different story. The pre-tax loss ballooned to more than £45 million, underscoring just how far the business remains from sustainable profitability. That disconnect has made the stock a favourite target for profit-taking on retail platforms. On AJ Bell, ITM Power recently became the most-sold name, overtaking blue-chip stalwarts like Shell.

The £46.5 Million Pivot Point

All eyes are now trained on May 26, when the UK's subsidy advisory body is due to publish its assessment of a proposed £46.5 million government grant. The funds would back the expansion of ITM Power's Sheffield factory under the "Chronos" programme, which aims to deliver an annual production capacity of one gigawatt. The next-generation electrolysers are designed to triple output per unit while slashing manufacturing costs by 40 percent and reducing the physical footprint.

A positive ruling would clear the way for management to take a final investment decision on the new facility in June. That timeline also coincides with two other potential catalysts: the outcome of the second UK hydrogen allocation round, and a final investment decision on Uniper's 120-megawatt project in the Humber region, which could quickly add heft to the order book.

A Military Angle

Beyond the civilian hydrogen market, ITM Power is quietly building a strategic niche. In partnership with German defence contractor Rheinmetall, the company is developing decentralised synthetic fuel plants designed to supply NATO forces. The rationale is straightforward: direct electrification remains impractical for many military applications, making e-fuels a more viable alternative for battlefield logistics.

Insider Moves Raise Eyebrows

The rally has also been accompanied by notable insider activity. Chief Technology Officer Simon Bourne exercised old stock options and subsequently sold around 873,000 shares. The company was quick to stress that the transaction was primarily aimed at covering tax liabilities — a standard explanation, but one that has done little to quiet chatter among retail traders already heading for the door.

With the subsidy verdict looming and a string of investment decisions on the horizon, the next few weeks will test whether the institutional bulls have read the tea leaves correctly — or whether the retail sellers have the better read on the risks ahead.