Nel ASA's Waiting Game: Institutional Faith Tested as Orders Outpace Cash Conversion

Nel ASA's institutional ownership holds at 21.63% despite dilution, as backlog surges 224% but revenue falls and CEO departure looms.

The ownership structure of Nel ASA offers a revealing glimpse into how professional money is positioning itself around a hydrogen company caught between promise and performance. Institutional investors held roughly 21.63 percent of the Norwegian electrolyser maker's 1.84 billion outstanding shares as of mid-August — a stake that looks all the more notable given the dilution those same shareholders have absorbed over the past year.

The share count has expanded by 6.74 percent within twelve months, a byproduct of capital measures that have chipped away at existing holdings. That institutions have nonetheless maintained or even added to their positions speaks to a certain patience — or at least a willingness to look past the current operational softness.

A Backlog That Grows While Revenue Shrinks

The central tension in Nel's story right now is the disconnect between its order book and its income statement. New orders in the second quarter jumped to 230 million Norwegian kroner, a 224 percent surge year-on-year, while the total backlog stood at 1.21 billion kroner — a cushion that should, in theory, provide visibility for the quarters ahead.

Yet revenue from customer contracts fell 12 percent to 153 million kroner, and EBITDA swung to a loss of 155 million kroner. The quarter was also weighed down by a 70 million kroner settlement with Iwatani, concluded roughly three weeks before the numbers were published. A backlog only matters if it converts into billable revenue and margin; until that happens, the market's skepticism is understandable.

Nel holds around 1.3 billion kroner in liquid assets, giving it financial runway. But that capital needs to be translated into operational progress — and soon.

Leadership Uncertainty Compounds the Challenge

Adding to the fundamental questions is a change at the top. CEO Håkon Volldal will step down, remaining in his role until the end of the year to oversee the handover, before moving to packaging company Elopak as chief executive no later than January 1, 2027. The succession question remains unresolved, and markets rarely greet a leadership vacuum warmly — particularly when the incoming executive must improve operational metrics.

The June announcement of Volldal's departure has now been followed by Elopak's confirmation, firming up the timeline. For institutional investors who prize management continuity, this is a factor being watched closely.

Analysts Trim Expectations

The market's response to the mixed quarter has been measured. JPMorgan cut its price target for Nel from 2.90 to 1.80 Norwegian kroner about two weeks ago, maintaining a Neutral rating — a nod to the underwhelming earnings quality. On Tradegate, the stock gave ground after the quarterly release and the target cut, though no fresh operational trigger appeared to drive the move.

The shares now trade at 0.1960 euro, roughly 46 percent below their 52-week high of 0.3655 euro reached in May. The gap underscores how far the valuation has retreated since spring, even as the price has stabilised above its 52-week low.

A Capacity Bet in Herøya

Amid the near-term headwinds, Nel continues to push forward with its electrolyser manufacturing expansion in Herøya. Capacity at the site is slated to reach 500 megawatts by the end of 2026 — a project viewed as one of the key levers for converting the growing order book into revenue more quickly.

The broader hydrogen sector remains constrained by delayed projects from major energy companies, which tempers customer willingness to commit capital. That backdrop makes the question of who stays invested — and who steps back — all the more pertinent.

What October May Reveal

The third-quarter report, scheduled for October 21, should offer early indications of whether the order momentum persists and how management communicates the impending CEO transition. Until then, the shareholder register remains a key barometer of how professional investors read Nel's medium-term prospects — and whether their patience has limits.