AFC Energy Shares Are Up 23.5% YTD but Have Fallen Drastically

The AFC Energy plc (LON: AFC) share price is up 23.5% this year. Still, a cursory look at its share price chart shows that the stock had risen by as much as 79% in early February before falling drastically to its current price as investor sentiment shifted.

The hydrogen fuel cells developer has yet to make significant announcements this year. Its last announcement was on 1 December 2022, when Peter Dixon-Clarke was appointed Chief Finance Officer (CFO) and a company director. The rally in AFC shares has not been driven by any important news from the firm.

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Looking at the broader sustainable energy sector, we can see that other companies developing renewable energy sources, such as ITM Power and  Cers Power, have also seen their share price rise as investor sentiment towards the industry shifted for the better. 

However, the initial rally in AFC energy shares did not last, as they have since turned lower and given up a substantial portion of their earlier gains. The key question on most investors’ minds is whether the company’s prospects are promising. 

The hydrogen power company is valued at about £165 million, but its revenues are minimal, given that it barely made over £0.5 million last year. Therefore, the company’s lofty valuation is primarily driven by investors’ optimism about its prospects. 

AFC Energy has attracted customers after securing the first commercial order for its S Series liquid-cooled fuel cell system last year. However, the company is burning cash at a high rate after recording a £9.4 million loss last year. 

The company will have to invest more in marketing its products even as competition in the renewable energy sector heats up, with more competitors joining the industry as governments set ambitious goals to transition from fossil fuels to sustainable energy sources. 

Investors looking to buy AFC shares should know it might be a while before the company generates a profit. 

*This is not investment advice. 

AFC Energy share price. 

The AFC Energy share price is up 23.53% this year after giving up a massive chunk of its earlier gains.