ITM Power’s MSCI Hangover Masks Strong Fundamentals and Government Backing

The British hydrogen electrolyser specialist has suffered a brutal reversal over the past seven trading sessions, with shares shedding nearly 34% to close at €1.35 on Wednesday. The sell-off marks a sharp correction from the €2.58 peak reached in late May, when a flurry of buying ahead of the MSCI United Kingdom Small Cap Index inclusion artificially inflated the stock. Since passive index funds completed their compulsory purchases, speculative traders and hedge funds have been unwinding their positions, triggering a cascade of selling that has now pushed the stock more than 16% below its 50-day moving average of €1.61.

Yet beneath the technical wreckage lies a fundamentally stronger picture than the share price suggests. ITM Power posted a record first-half revenue of £18 million and upgraded its full-year guidance to between £40 million and £43 million. The order book has swelled to £152 million, with 71% of those contracts considered profitable. Net liquidity of £210 million to £215 million provides ample near-term financial flexibility, particularly after the government-backed Great British Energy took a 10.4% stake as part of a £40 million capital injection. The state-owned entity’s involvement underscores the strategic importance the UK government places on domestic electrolyser manufacturing.

A crucial piece of the puzzle fell into place on 20 May, when the Competition and Markets Authority approved a £46.5 million grant towards the automated Chronos production line at Bessemer Park in Sheffield. The funding is part of a broader £86.5 million package designed to scale manufacturing capacity to one gigawatt, with the Chronos stack boasting 2.5 MW of power — three times the output of its predecessor at 40% lower capital costs. Analysts at Jefferies responded by lifting their price target to 200 pence, though the broader consensus remains far more cautious at just 84.60 pence, reflecting the wide divergence in opinion over the company’s valuation.

Should investors sell immediately? Or is it worth buying ITM Power?

Two additional catalysts still hang in the balance this month. ITM Power has been named preferred supplier for two projects in the UK’s Hydrogen Allocation Round 2, with final awards expected in June. Meanwhile, Uniper’s final investment decision on the 120 MW Killingholme project could also land before month-end. Separately, a new partnership with Protium Green Solutions will target industrial green hydrogen developments, beginning with the 15 MW Cromarty facility in Scotland, where a final investment decision is pencilled in for December 2026.

Technically, the stock is approaching oversold territory with an RSI reading of 34. The 100-day moving average at €1.17 offers near-term support, while the 200-day line at €1.00 provides a critical floor roughly 26% below the current price. Analysts at Morgan Stanley and Jefferies see the company on track to reach EBITDA break-even by fiscal 2028, but the market’s immediate focus remains on whether the operational milestones can arrest the selling pressure before the technical support zones are tested.