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Can AFC Energy’s latest partnership boost its share price?

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The AFC Energy (LSE:AFC) share price has had a somewhat lacklustre year. Despite surging by over 300% in the last quarter of 2020, the stock has since trended downward. While it’s still up 210% over the previous 12 months, AFC Energy’s share price has fallen by 31% since the start of 2021. So, what’s going on? And will its latest partnership spark another surge? Let’s take a look.

Growth on the horizon

I’ve explored this business before. But as a quick reminder, AFC Energy is a developer and manufacturer of hydrogen-powered energy solutions. These solutions include a hydrogen fuel cell stack that can be deployed at electric vehicle recharging stations.

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With the world slowly transitioning to electric vehicles, this business certainly sounds promising. So it’s unsurprising to see investors paying attention to the firm. However, it’s worth noting that the firm remains in a very early stage of development. Excluding the £150,000 made in the first quarter of 2021, AFC Energy is a pre-revenue company.

But that might soon change. Management previously said that 50 prospective clients are looking into using its technology. And just this month, the company signed a partnership with Urban-Air Port to provide its hydrogen charging technology. Urban-Air Port is a developer and operator of electric-only airports designed to cater to drones and electric vertical take-off and landing (eVTOL) passenger vehicles. The company intends to develop 65 sites with the help of Hyundai. And the first is set to open in Coventry City Centre next year. If it proves a success, AFC Energy and its share price could be in for some rapid growth.

Knowing all that, why has the stock performed so poorly this year?

The AFC Energy share price has its risks

The falling AFC Energy share price

Despite the promising prospect of future performance, there remains a high level of unknowns. While many parties may be interested in the technology, Urban-Air Port included, management hasn’t been particularly forthcoming with financial details.

It’s currently unknown just how much this latest partnership and other supposedly soon-to-be signed contracts are actually worth. And with limited details being released, it seems investor patience is starting to wear thin. Combining this with the added risk of being an unprofitable firm, it’s not surprising to see the AFC Energy share price lose momentum.

The bottom line

The company currently has a £396m market capitalisation. That’s down from £474m since the last time I looked at this business. But even with this latest partnership, my opinion of the firm remains unchanged. With no clear fundamentals to project a realistic revenue forecast, the AFC Energy share price continues to look inflated by investor expectations and managerial hype. Therefore, I’m still not going to be adding this business to my portfolio today.

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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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