11. August 2021 | 10:28 CET
Nel ASA, First Hydrogen, Plug Power - Hydrogen market awaits impetus
Since sustainability and climate protection have come more and more into focus, the hype around hydrogen stocks has also been in full swing. This rally in almost all stocks continued until the end of January. Some of the company valuations were astronomically high. Since investors have been looking more at key figures, the share prices of hydrogen companies have been falling. The key objective is to lower the cost of hydrogen. That would make it economically viable, and the share prices of companies in the hydrogen market would rise significantly again. Currently, the market is waiting for impetus. A lot of funding is being made available in Europe and the USA for hydrogen development. Today we take a closer look at whether there is already impetus from the companies.
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ISIN: NEL ASA NK-_20 | NO0010081235 , PURE EXTRACTION CORP. | CA74622J1012 , PLUG POWER INC. DL-_01 | US72919P2020
"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Nel ASA - Q2 figures will probably be poor
Nel ASA currently lacks news. Since the quarterly figures on May 4, there have only been three announcements. The Company has joined a consortium twice, namely pilot projects in the steel and wind power industries. This news is promising for the future, but only time will tell whether these projects are successful in the long term. On June 24, a framework agreement was signed with Howden. Here, Nel ASA supplies hydrogen compressors for the electrolyzers, which should provide an increase in sales.
The Q1 figures were only convincing in terms of sales growth. However, the bottom line was a loss of around 580 million Norwegian Kroner (NOK), mainly due to the investments. That could not boost the share price. Also, the news that analysts received a letter indirectly announcing a warning ahead of the Q2 figures does not bode well for the figures to be presented on August 19.
In addition, Trevor Milton, founder of Nikola and currently charged with multiple counts of fraud, sold 7.5 million shares of Nikola stock between Aug. 4 and 6. Since the lawsuit mentions inconsistencies in almost all aspects of the Company, the stake in Nikola is likely to continue to decline in value. Nel ASA's stock also broke a critical support level on August 5, so lower prices are to be expected. Before a break of the downtrend line, one should refrain from investing.
First Hydrogen - Approval granted
If you want to buy First Hydrogen at your broker, you will be disappointed. The Company is currently still listed under the name Pure Extraction. However, the renaming to First Hydrogen is already a done deal. The Canadian Company has launched to develop a zero-emission hydrogen fuel cell van. It aims to achieve this ambitious goal within a year by building its first prototype.
The Company announced its collaboration with Ballard Power Systems and AVL Powertrain UK back on June 11. This collaboration still had to be approved by the TSX Venture Exchange. The approval was granted on August 6. In addition, a private placement of CAD 3 million at CAD 1.25 each was announced. The money will allow the development of the prototype to be completed. Costs for this have been put at CAD 2 million.
The Company has chosen the right sector with the transportation business. Experts see better opportunities for hydrogen in trucking than for e-cars because of the current higher range. In addition, hydrogen tanks are significantly lighter than the batteries of e-cars. With the two renowned partners at its side, there is an opportunity for an investor to invest in the development of hydrogen-powered vans at a very early stage. Following news of the approval, the stock rallied to CAD 1.67.
Plug Power - Positive outlook despite losses
Plug Power released its second quarter results last Thursday after the market closed. Revenue was up 83% year-on-year and management raised its full-year guidance to USD 500 million, climbing 50% from 2020. At the same time, however, the Company continues to burn cash. Its quarterly loss came in at USD 99.6 million.
Unlike Nel ASA, however, Plug Power does not own any investments that need to be written off on an ongoing basis. The money is going into projects that are expected to pay off in the future. Various joint ventures have been launched. In France, for example, the infrastructure for hydrogen filling stations is to be improved. In the USA, attempts are being made to produce green hydrogen, and a cooperation agreement has also been concluded with the hydrogen bus manufacturer BAE Systems.
In contrast to the competition, the share was able to move away from its low for the year and is currently trying to establish an upward trend. The closing price should not fall below the low of USD 24.75. It remains to be seen whether management's positive expectations will be confirmed. The US subsidy programs in the hydrogen sector will certainly help the Company.
The hydrogen sector is a market of the future. As soon as it is possible to reduce the price of hydrogen significantly, the breakthrough will be achieved. Until then, one should only invest in smaller hydrogen stocks such as First Hydrogen, as the market valuation has not yet risen to extreme levels. The bottoming out of Nel ASA should be awaited. Plug Power seems to have already bottomed out, but the overall valuation is still too ambitious.