Nel ASA's Two-Front Battle: Cost Innovation Meets a Stubborn Income Gap

Nel ASA posts record order intake but deepens losses, betting on cheaper PA-Series to convert backlog into revenue amid cautious Wall Street.

The hydrogen electrolyser maker Nel ASA is trying to fight on two fronts at once: slashing the price of its hardware to win new business, while simultaneously proving to sceptical investors that a swelling order book can eventually be converted into actual revenue. The second quarter of 2026 left the company with a mixed hand — record order intake on one side, deepening operational losses on the other.

A Product Launch Aimed at the Industry's Biggest Hurdle

At the centre of Nel's commercial strategy sits the PA-Series, a pressurised alkaline platform unveiled in May. For 25-megawatt installations, the company says the system delivers turnkey costs of under $1,450 per kilowatt. That figure matters because conventional systems on the market typically run above $3,000 per kilowatt, according to industry observers. By attacking the cost curve head-on, Nel is targeting the very factor that has historically made industrial customers hesitate before committing to electrolyser projects.

The timing is deliberate. Nel had just recorded a sharp acceleration in new orders — intake jumped 224 percent in the second quarter — yet revenue from customer contracts fell to NOK 153 million. A cheaper product, the logic goes, could help convert that order momentum into recognised sales without customers balking at price.

The Numbers Behind the Narrative

The quarterly figures, released in mid-July, paint a picture of a company in transition. The order backlog grew to NOK 1.213 billion, while new orders reached NOK 230 million — nearly all of it, 96 percent, concentrated in the PEM segment. That concentration makes the company more predictable in one sense, but it also ties its fortunes closely to execution speed in a single technology line.

Operationally, the red ink persists. EBITDA came in at minus NOK 155 million, with the quarter additionally burdened by a NOK 70 million settlement payment to Iwatani Corporation of America. That one-off legal cost should not repeat, but it underscores how quickly disputes can weigh on the balance sheet.

Financially, Nel retains room to manoeuvre. The company confirmed a cash position of roughly NOK 1.3 billion at the end of the second quarter — a cushion that provides breathing space while the search for a new chief executive runs in parallel. CEO Håkon Volldal remains in post until a successor is named, according to company statements.

Wall Street's Cautious Stance

The market's response to the quarterly numbers has been measured at best. JPMorgan cut its price target on the stock to NOK 1.80 from NOK 2.90 on August 5, while keeping a "Neutral" rating. The revision reflects the tension between Nel's growing backlog and its still-negative earnings trajectory.

The share price itself has shown little directional conviction. The stock last traded at EUR 0.2015, down 2.4 percent on the day, with seven-day and thirty-day moves of just 1.1 percent and 0.8 percent respectively. Since the start of the year, the shares have gained 6.7 percent. The picture over a longer horizon is starker: the stock sits 45 percent below its 52-week high of EUR 0.3655, reached in late May, though it remains 16 percent above the February 26 low — suggesting a tentative stabilisation at depressed levels.

The secondary source reports a slightly different recent close of EUR 0.2025, a 2.2 percent decline, with a seven-day gain of 1.6 percent. Either way, the market has yet to reward the PA-Series announcement in any meaningful way.

What the Coming Quarters Will Decide

Nel's near-term fate hinges on one central question: can the company translate its NOK 1.2 billion backlog into revenue and margin before operating losses erode its financial flexibility?

The bull case rests on the backlog being worked through efficiently while the PEM division maintains its momentum. With one-off charges fading and a more competitive product in the field, margins could improve. The stock's proximity to its 50-day moving average of EUR 0.2117 — currently about 4.8 percent below — hints at possible chart-level support if operational progress follows.

The bear case is equally clear. An EBITDA loss of NOK 155 million alongside falling customer-contract revenue is a warning sign that cannot be waved away by a growing order book alone. JPMorgan's reduced target reflects exactly that caution. The unresolved leadership question adds another layer of uncertainty to an already fragile operational situation. And with the shares still 45 percent below their spring peak, much of the risk may already be priced in — but another weak quarterly print could easily send the stock back toward its yearly low.

The market for hydrogen electrolysers is expected to expand at a compound annual growth rate of 24.2 percent through 2036, reaching $8.81 billion, according to market research cited in the secondary source. Nel is named among the leading providers in those analyses. But cost advantages only matter if they translate into durable order intake — and competitors are unlikely to stand still.

The next concrete checkpoint arrives on October 21, when Nel publishes its third-quarter numbers. By then, investors will want to see whether the order surge is finally starting to show up in the income statement — or whether the gap between bookings and billings remains the defining feature of this hydrogen story.