Nel ASA's Submarine Order Book Grows While the Cash Clock Keeps Ticking

SB1 Markets cut Nel ASA's price target to NOK 0.30 with a sell rating, as USD 20 million in Collins Aerospace orders deliver only in 2027-2028.

Nel ASA shareholders are staring down a familiar binary: the Norwegian hydrogen specialist either proves it can slow the bleed, or the market's patience runs out. At a current price of €0.1888, the stock is pinned in a narrow band, and the mood around it has shifted. Momentum-driven rallies in the hydrogen space are over. What investors want now is hard evidence on the road to profitability.

That tension was on full display over the past week. Nel Hydrogen US, the company's American subsidiary, booked additional orders from Collins Aerospace for PEM electrolyser stacks used in submarine oxygen generation. Combined with an order reported just before it, the contract volume comes to roughly USD 20 million. The headline looks strong. The timing does not. Deliveries are not scheduled until 2027 and 2028, meaning the revenue will not reach the income statement for years, even though the orders themselves will be entered into the books in the third quarter of 2026.

A Target Cut That Sharpened the Skepticism

On September 29, SB1 Markets slashed its price target on Nel ASA from NOK 0.50 to NOK 0.30 while keeping its sell rating intact. Analyst Andreas Skeisvoll Grimsmo pointed to fundamental doubts about the business: no clear path to profitability, and an industry drowning in overcapacity. Against that backdrop, Nel holds only about 5 percent of a fiercely competitive market.

The stock has slipped 2.6 percent since the downgrade, a sign that market participants are holding back ahead of the next set of numbers. Yesterday's close came in at €0.1906, which leaves the shares 48 percent below their 52-week high.

Grimsmo also flagged the possibility of another capital raise in 2028, a prospect that puts the risk of future dilution squarely on shareholders' radar. With revenue from the big-ticket orders still years out, the company's financial runway has become the central question.

Order Book Strength Versus Cash Burn Reality

The key issue for the share price is how quickly new business converts into actual revenue and sustainable margins. On the Collins Aerospace contracts, that conversion is slow by design. The order intake bolsters the backlog in Q3 2026 but contributes nothing to operating cash in the near term.

Investors are therefore focused on the actual cash outflow and the pace at which existing projects are being executed. In hydrogen, a nominal project pipeline no longer commands trust on its own. Only predictable cash flows earn a premium. Nel has to demonstrate it can keep manufacturing costs under control before the long-term supply agreements kick in. Without visible progress on cost reduction, the valuation discount to earlier periods could harden further.

What a Turnaround Would Require

In a bullish scenario, Nel uses its recent operational wins as a foundation for stabilization. The US business, with orders for naval programs spanning the United States, the United Kingdom and France, shows the technology is established in the demanding defense and government sector.

If upcoming interim reports show margin pressure easing in the core segments, that could lay the groundwork for a re-rating. Such an outcome depends on Nel proving strict cost discipline and reducing its cash consumption. If the company can show it will bridge the gap until major project deliveries without threatening liquidity shortages, short sellers would likely grow more cautious. The stock could then break away from recent lows and move back toward its 200-day moving average, from which it currently sits 11 percent below.

The Bear Case: Delayed Decisions and Widening Losses

The downside risk is substantial. Should the upcoming quarterly report reveal that day-to-day revenue is falling short of market expectations, confidence would erode quickly. The hydrogen market is suffering from delayed final investment decisions by industrial customers. If both new orders and call-offs from existing framework agreements stall, production capacity utilization takes a direct hit.

More pressure could come from the analyst community. SB1 Markets' deep target cut to NOK 0.30 reflects serious doubt about whether Nel can reach break-even in the foreseeable future. If other banks follow with downward revisions, renewed selling pressure is likely. In that bearish scenario, orders with delivery horizons in 2027 and 2028 would be seen as too distant to justify the ongoing cash burn.

The Chart Line That Matters Now

For investors, the setup boils down to a clear technical and fundamental constellation. As long as the stock holds its 9.1 percent cushion above its 52-week low, the chance of stabilization remains intact. If that buffer gives way under sustained selling pressure, a test of new annual lows looms.

The next concrete catalyst is the release of third-quarter 2026 results, scheduled for October 2026. Media reports put the announcement date somewhere between October 15 and October 21, 2026. That report will set the direction: if the figures confirm a slowdown in cash burn, the optimists regain support. If losses widen instead, the skeptics will take the upper hand.