Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading
Shares of hydrogen power company Ceres Power Holdings plc (LON: CWR) crashed 11.9%, crossing below a critical resistance level in an extension of the downtrend that started in late January after its shares hit a high of 1624p.
The hydrogen fuel cells company’s shares have kept falling despite making multiple positive announcements over the past month as sellers kept pushing its share price lower.
Today’s decline did not have a specific trigger, but the fundamental reasons behind the company’s overall decline’s fundamental reasons remain the same.
Ceres Power shares benefitted immensely from the high investor appetite for clean energy sticks that made its shares rally 501% last year. Still, the excitement about the sector appears to have waned since February this year.
The firm’s shares are now headed towards the next resistance level at 940p, which many are hoping will hold to prevent a more significant decline.
One of the main reasons why Ceres Power shares are falling is that the company needs to invest a significant amount of money in developing new technologies to reflect the progress made in hydrogen energy cells and power designs.
The company licenses its technology to other firms as part of an asset-light business model and could struggle to increase future revenues. Hence, it is likely to keep making losses given the substantial capital expenditures outlined above.
Investors who bought at the top are sitting on significant losses at today’s prices, and there’s no clear end in sight for the current downtrend. However, the 940p level offers hope that maybe the trend will reverse, but this means there could be further losses in store for existing shareholders.
As we all know, nothing is guaranteed in the markets, so we cannot rule out an upward reversal from current prices.
Ceres Power share price.
Ceres Power crashed 11.85% to trade at 1056p, dropping from Wednesday’s closing price of 1198p.
Should you invest in Ceres Power shares? Ceres Power shares are traded on the AIM market of the London stock exchange (the alternative investment market) which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Ceres Power shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies
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