Shares of Sheffield-based hydrogen energy business ITM Power (LSE: ITM) have been exploding! The price has doubled in a matter of months. Since March, the share price is up 167%. The firm has grown to such a size that it might soon be in contention to enter the FTSE 250 (it’s already bigger than many on that index).
This all comes with the backdrop of an awful few years for the stock. Before this year’s run up, the shares had fallen by 96% in only four years. The current 71p share price looks like it might be cheap compared to the all-time high of 640p hit back in 2021. What’s going on here? And with a potentially huge role in a green future, is this a renewable energy stock that could surge long into the future?
Potential
The potential around ITM Power is its possible role as a key link in the Net Zero revolution. The firm produces hydrolysers, which in simple terms take energy like that from solar or wind and convert it into hydrogen. This hydrogen can be stored more cheaply or used for other purposes.
This kind of technology promises to be a game-changer for countries like the UK, which creates a lot of excess renewable energy. Britain spends hundreds of millions of pounds a year to turn off wind turbines. Hydrolysers could be one solution to that kind of waste.
This isn’t pie in the sky stuff either. ITM Power has been in existence since 2000 and its hydrolysers started being sold in 2010. The firm notably signed contracts to deliver two 100MW hydrolysers for a plant in Lingen, Germany. It’s also working on a deal with oil giant Shell.
Why has the stock been surging this year? It’s down to a string of orders, largely coming from Europe. Compare the firm’s revenue for financial years 2023 (£5m), 2024 (£17m) and 2025 (£26m). The next financial year is expected to come in at £40m too. This is incredible growth although it must be pointed out the firm still isn’t turning a profit.
The future
So what do we have here? An exciting stock with a compelling growth story and surging revenue, with the big caveat that it’s still pre-profit and trading at over 10 times sales. Stop me if you think you’ve heard this one before.
The reality is that ITM Power is still a highly speculative investment. The future of hydrolysers in green energy is extremely uncertain and pretty much no one can predict where they will be in 10 or 20 years.
As such, I’d class this as a high-risk, high-reward stock. I have a small part of my own portfolio in such investments. They can be big winners, and therefore I’d say ITM Power is worthy of consideration for those who understand the risks.
