ITM Power: Record Sales and Rheinmetall Pact Fail to Halt 47% Rout

Record £18m revenue and upgraded guidance fail to lift ITM Power shares, which have plunged 47% due to MSCI index arbitrage unwind and sector-wide losses.

The numbers coming out of ITM Power are as strong as they have ever been. The British hydrogen specialist posted a record first-half revenue of £18 million, upgraded its full-year guidance to £40–43 million, and built an order book worth £152 million, over 70% of which it considers profitable. It has a freshly minted partnership with German defence giant Rheinmetall to build a European network of synthetic fuel plants for NATO forces. The UK government, via Great British Energy, now holds a 10.8% stake after pumping in £40 million. Yet the stock has lost nearly half its value since late May.

The share price tells a starkly different story. From a 2025 high of €2.58, ITM Power has tumbled to €1.35 — a decline of 47%. The pain has been acute in the past seven trading sessions alone, during which the stock shed 34%, including a 10.68% drop on Wednesday. The disconnect between operational momentum and market sentiment could hardly be wider.

The culprit is a textbook arbitrage unwind tied to index rebalancing. ITM Power’s inclusion in the MSCI UK Small Cap Index at the end of May had been widely anticipated. Hedge funds and arbitrageurs bought heavily ahead of the adjustment, expecting passive funds to be forced buyers at the switch date. They were right — the stock rallied to €2.58. But once the index tracked the shares, the speculators exited their positions, unleashing a wave of selling that the market has yet to absorb. The stock now trades nearly 16% below its 50-day moving average of €1.61. Goldman Sachs has added to the pressure, reiterating its sell recommendation with a price target of 63 pence, well below current levels.

Sector-wide weakness has compounded the rout. Peers such as Ballard Power and Plug Power have suffered double-digit percentage losses, while Clean Power Hydrogen was forced to suspend trading after a plant incident. ITM Power was caught in the downdraft even as its own fundamentals improved.

The financial position offers some cushion. The company expects to end the current year with a cash balance of up to £215 million, more than enough to fund near-term operations. The cash injection from Great British Energy — part of an £86.5 million package to scale the company’s “Chronos” electrolyser technology — provides both capital and political backing. The UK’s Competition and Markets Authority approved the £46.5 million grant component on 20 May, clearing the path for a production ramp-up at the Bessemer Park site in Sheffield to a capacity of one gigawatt.

ITM Power has also been expanding its commercial footprint beyond traditional green hydrogen supply. The Rheinmetall alliance targets a completely new market: synthetic fuels for NATO military forces. And on 2 June, the company inked a partnership with Protium Green Solutions to develop and operate industrial-scale green hydrogen plants, starting with the 15-megawatt Cromarty project in Scotland. A final investment decision for Cromarty is expected in December 2026.

Several near-term catalysts could shift the narrative. The company is awaiting a final decision on the Sheffield grant — already approved by the CMA but potentially subject to further conditions — as well as the outcomes of two other major project proposals that could receive the green light this month. These decisions are critical: Jefferies estimates that failure to secure the funding would imply 52% downside risk, while success could lift the stock toward 200 pence. Morgan Stanley has upgraded the shares to “overweight”, forecasting an EBITDA break-even as early as fiscal 2028.

Technically, the recent sell-off has pushed the relative strength index to 34, close to oversold territory. The next meaningful support lies at the 200-day moving average of €1.00, a further 26% below Wednesday’s close. Whether the market begins to price in the company’s operational achievements before that level is reached will depend on the outcome of the looming funding decisions — and, ultimately, on the full-year results due on 15 September. The pieces are in place for a turnaround; the market is still waiting for the proof.