Nel ASA's Second Quarter Delivers a Distorted Picture — and Sets Up an October Reckoning

The Norwegian electrolyser maker's latest earnings report came with a catch: the headline loss was inflated by a one-off settlement, obscuring the underlying trajectory of a business that is still searching for its footing. Nel ASA swung to an EBITDA of minus 155 million Norwegian kroner in the second quarter of 2026, a deeper hole than the minus 100 million kroner recorded in the first quarter and the minus 86 million kroner loss posted a year earlier. The deterioration was driven in large part by a 70 million kroner charge tied to the resolution of its relationship with Japanese partner Iwatani.

Strip out that exceptional item, and the picture looks less alarming — though hardly rosy. Revenue from customer contracts slipped 12 percent year-on-year to 153 million kroner, yet total income and revenue actually climbed to 182 million kroner, up from 152 million kroner in the preceding quarter. The uplift reflects a substantial EU grant: Nel received 118 million kroner during the period to support commercialisation of the next generation of its pressurised alkaline electrolyser. That subsidy pipeline remains intact even as the core operating business struggles, with prototype testing of the new platform continuing to yield encouraging results and the commercial rollout with initial partners and customers having commenced in early May.

Management has responded to the persistent losses with headcount reductions — staffing is down 13 percent versus the same quarter last year — as part of a broader cost-cutting and capacity-adjustment programme. Yet the fact that EBITDA still deteriorated despite those savings underscores how heavily the Iwatani charge distorted the quarter's results. Without it, the earnings decline would have been far more moderate.

For investors, the challenge is parsing signal from noise. The order backlog of 1.213 billion kroner at quarter-end, up 9 percent from the prior quarter, offers at least a tentative sign of stabilisation in the PEM segment. But the equity market has yet to take a decisive view. Shares closed Tuesday at EUR 0.1900, down 1.6 percent on the day, and have shed 3.4 percent over the past 30 days. The stock now trades roughly 5.2 percent below its 50-day moving average of EUR 0.2005, with a relative strength index of 37.1 suggesting an oversold condition that has not yet translated into a turning point. At a market capitalisation of around EUR 352.64 million, Nel remains a small-cap player in the hydrogen space whose valuation hinges on management's ability to convert its austerity measures into durable profitability.

The next major test arrives on 21 October 2026, when Nel is scheduled to report third-quarter results — followed by the fourth-quarter release on 18 February 2027. The company has already published its financial calendar for 2026 and 2027, giving investors a fixed date around which to frame their expectations. The stock, which last changed hands at EUR 0.1908, sits roughly 48 percent below its 52-week high, with no fresh company-specific catalyst on the horizon to break the drift.

What matters in October is less the revenue line than the direction of order intake and cost structure — the very metrics that have disappointed of late. JPMorgan cut its price target on Nel to NOK 1.80 from NOK 2.90 in early August while maintaining a "Neutral" rating, a move that underscored the prevailing scepticism at the time, though it is now several weeks old and should not be read as the current analyst consensus.

The bull case rests on a visible stabilisation or rebound in order intake, which could be interpreted as evidence that the operational trough has passed. Any positive news on new contracts or demonstrable margin improvement could restore investor confidence and lift the shares from their depressed levels. With an RSI of 38.1, the stock is technically not overbought, leaving room for a recovery should a fundamental trigger emerge.

The bear case is a continuation of the established pattern: disappointing numbers, an absence of major orders and persistent cost pressure. Should the October report deliver another round of weak operational data, downside pressure would likely intensify, and further cautious analyst commentary cannot be ruled out. Structural industry risks also loom — delays in subsidy programmes or a slower-than-expected market for green hydrogen could erode visibility on new orders regardless of company-specific progress.

Until the third-quarter report lands, the shares are likely to remain range-bound or drift lower. A decisive shift in momentum — whether through major contract wins or tangible operational improvement visible in the October figures — would be required to brighten the outlook. The 21 October date now stands as the next concrete checkpoint for the investment thesis, with no obvious catalyst capable of settling the direction beforehand.