The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Some of you will remember a previous discussion we had involving Professor David Cebon. Personally I'm not a fan as I find his arguments a bit 'double standards'. He does at least support Green Hydrogen and never Blue. But he also only really advocates direct replacement of existing grey hydrogen demand with green, NOT using hydrogen for anything energy-related. The podcast posted is worth a listen and you can make up your own mind as regards 'Friend or Foe'.
https://podcasts.apple.com/gb/podcast/how-clean-is-hydrogen-actually-with-prof-david-cebon/id1449137711?i=1000581354031
For full reference you can find out more about his "Hydrogen Science Coalition" on their website.
https://h2sciencecoalition.com/
Is it just an anti-hydrogen echo chamber?
I'm happy to take the other side of your trade Investhome. ITM may appear stalled, as their sales and marketing strategy seems ill-judged, but until the entire market shows signs of abandoning green hydrogen I think writing off ITM is premature. If your short position is a relatively short term trade then there's a good chance you will be given an opportunity to cash in a profit as the company results are unlikely to pick up with a 12 month outlook. I am though still confident as a long term prospect I can bank another 10x from the prices I'm being offered thanks to nonthusiasts such as your good self. Two sides make a market. Best of luck with your short.
bilbs, there's a problem with your theory that economics is pretty much understood. If that were the case then surely economists would typically be in constant agreement. Evidence shows that economists don't seem to agree on a) the problem, b) the cause of the problem, c) the solution, or d) the future outcome. I like the old joke that economists have predicted 9 out of the last 5 recessions.
Why haven't we heard anything from Snam? (Or have I missed it)
It's coming up to 2 years since Snam made an investment into ITM and announced the 'preferred supplier' for first 100MW of electrolysers.
It also took a while before we recognised the first real order from Linde, but I can't remember whether that was after 1 year or 2. If it was also a 2 year wait, maybe we've got a decent order from Snam just around the corner.
I applaud the bravery. I also happen to think it's a reasonable target (not necessarily a 12 month one though). I still maintain that a 1GW full factory is worth £5bn market cap. Even if you think that's optimistic, what ITM effectively restated yesterday is that a 1GW factory isn't big enough. So an extra 50% capacity would surely be worth £5bn market cap. Whichever way you cut it that's about 7-fold increase on where we are today and should be operating at (new) capacity within 3-5 years. You can never satisfy the nay-sayers who think the whole thing's worthless, but if they can fill it then why not £6 a share.
My conclusion is that really not much has changed. A case of over-promising and under-delivering perhaps? The whole sector seems to have been over-optimistic about how quickly everything would happen. Now that a dose of reality has sunk in we can get back to a 10+ year growth story which should see ITM (and others) fulfill their potential...as long as the new CEO can push for sales.
I'm certainly picking some up. We haven't been offered these prices since April 2020. I considered it a good price back then for a long term hold and I still believe that. I think we need to look through the bubble in stocks during the Covid money-printing episode and take a position on a long term green energy future.
We discussed the hype cycle a couple of years ago. I guess this is what they call the "Trough of Disillusionment".
https://en.wikipedia.org/wiki/Gartner_hype_cycle
I hope you didn't miss by far Bellers. I think, though, if it approaches the £1 level I will rebuild my position back up to my original long term holding target. With any luck the current issues will look like a blip in the rear-view mirror. I still believe the long-term market is out there and that it is only short-term issues that the company is navigating its way through poorly.
Mark, there was a similar point with Plug Power recently. Their market cap was not much higher than their cash balance. Interesting that it more than doubled in the following weeks (due to Inflation Act and some large sales announcements). I hope that ITM doesn't become a takeover, instead they should take a leaf out of Plug Power's book and go out and secure the sort of sales that prove they can compete.
bilbs, we have assumed for some time that the relationship with ITM-Linde is that the ITM-Linde outfit is responsible for sales and site installation whilst ITM is responsible for electrolyser manufacture. To me it would make sense for ITM to be allowed to go after some smaller sales (circa 10MW) in order to provide exactly the continuous work you mentioned. Having a huge pile of orders to fulfill in 2025 is not providing any short term benefit.
Will be interesting to see if the initial price drop reverses later on as people recognise the positive turn the company is taking i.e. CEO recognises a new skill set is required and spending on 2.5GW factory is too early. The fact they still talk about needing to expand to 1.5GW is still very positive. They've added significantly to the contracts backlog, it's just that the delivery dates are so far into the future they won't be in the results for 18+ months.