ITM Power: The £152m Order Book That Can't Tame an 88% Volatility Storm

ITM Power shares swing wildly, but order book margins improve to 71%. Revenue guidance raised, yet cash burn persists until 2028.

The arithmetic of ITM Power's 2026 is brutal in its simplicity. Buy at February's low of £0.648, and you're sitting on an 88% gain even after the recent slide. Buy at May's euphoric peak of £2.58, and you're nursing losses of more than half your stake. The electrolyser maker's shares closed Thursday at €1.22, up nearly six percent on the day — but that bounce does little to obscure the deeper truth: this is a stock that has spent the year ricocheting between despair and delirium, with the 30-day annualized volatility reading of 88.4% doing a passable impression of a crypto token rather than an industrial manufacturer.

The Margin Story Hiding Inside the Order Book

Behind the price swings, however, sits a more substantive narrative. ITM Power's order book has grown to £152 million, and — more significantly — the proportion of profitable contracts within it has climbed from 60% in April 2025 to 71% today. That shift matters more than the headline number, because it speaks to the company's ability to convert its pipeline into cash-generative work rather than merely revenue-generating activity.

The operational improvements are visible in the half-year numbers. Record first-half 2026 revenue of £18 million, driven primarily by plant sales, accompanied a narrowing of the gross loss from £10.2 million to £6.5 million. In mid-February, management raised its full-year 2026 revenue guidance from £35–40 million to £40–43 million — an 11% uplift at the midpoint — citing project progress and the switch to percentage-of-completion accounting.

Crucially, the cost and cash forecasts stayed put. Year-end cash remains guided at £170–175 million, with EBITDA losses of £27–29 million. RBC Capital Markets called the update "overall slightly positive," pointing to better project execution and accounting effects without any change to the cash position.

The Catch in the Remaining 29%

Yet the order book has a wrinkle that tempers the optimism. The remaining 29% of contracts are legacy projects that will be recognized as revenue over the next 18 months but contribute nothing to margins. That means the quality of the book is improving, but the tail of low-margin work still needs to be worked through before the financial picture fully reflects the operational turnaround.

The company continues to burn cash. Even Morgan Stanley, among the most bullish voices on the stock, doesn't model operating profits until 2028 — and that assumes flawless execution over the next two years. Analyst opinion remains fragmented: seven buy ratings against three holds and two sells. The RSI reading of 41.7–42.6 (depending on the calculation window) suggests neither oversold conditions nor fresh upward momentum — just a stock pausing after a violent phase, waiting for its next catalyst.

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What the Directors' Purchases Actually Mean

Amid the turbulence, a recurring data point deserves context rather than drama. In mid-July, CEO Dennis Schulz and CTO Simon Bourne again bought shares — through ITM Power's Buy-as-You-Earn scheme. Each director acquired 134 partnership shares and received 134 matching shares, totaling 268 ordinary shares per person, at a price of £1.1231 on July 15.

This is not a discretionary show of confidence. It's a structured employee program open to the entire workforce: staff can invest up to £150 monthly in ordinary shares, with the company matching one-for-one. The July purchase continues a monthly cadence both executives have maintained all year — 227 partnership shares each at £0.65989 in January, 241 at £0.62309 in February, 233–234 at £0.64229 in March, 156–157 at £0.95803 in April, 92 at £1.6196 in May, and 113 at £1.3305 in June.

Analysts tracking these disclosures are unanimous: this is scheduled participation in an employee scheme, not discretionary insider buying. The transactions demonstrate ongoing management engagement — nothing more. No strategic signal can be read from them.

The Two Truths

ITM Power currently occupies a space between two realities. On one side stands a genuinely growing market for green hydrogen infrastructure. On the other, the harder task of translating contracts into reliable cash flows. That tension explains why the stock behaves less like a solid industrial equity and more like an option on a technological transition that remains incomplete.

The technical picture reflects the ambivalence. The shares trade roughly 21% below their 50-day average of £1.54, yet about 11% above the longer-term 200-day average of £1.10. That gap between short-term weakness and longer-term strength is the fingerprint of a sector still searching for equilibrium.

With a market capitalization of roughly €793 million, ITM Power remains a mid-cap bet on a theme the markets haven't yet learned to price consistently. The stock's path through the coming months hinges on whether the February guidance of £40–43 million revenue holds, whether the £152 million order book continues converting into profitable, cash-generative contracts, and whether the margin improvement visible in the half-year results proves durable. The next concrete test arrives with the full-year results for the fiscal year ending April 2026. Until then, the tug-of-war between improving fundamentals and an ambitious valuation looks set to keep the swings violent.