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

The AFC Energy share price could be set to explode in 2022. Zaven Boyrazian takes a closer look at the firm’s growth potential.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »

Black father and two young daughters dancing at home
Investing Articles

A £3K investment buys me 632 shares in 2 stocks for a second income!

This Fool explains how a second income is possible through dividend-paying stocks and details two picks that could help her.

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Here’s what these results tell me about the Lloyds share price

A policy of progressive shareholder returns, including big dividend yields, makes the Lloyds share price look super cheap to me.

Read more »

Couple working from home while daughter watches video on smartphone with headphones on
Investing Articles

Passive income from 9.2% yield stock could cut pressure as costs spike

Passive income is one way to reduce the pressure on families, especially as a new study finds a third of…

Read more »