Gelion PLC (LON: GELN) has fallen another 19% today as the IPO jump fades away. Gelion was listed on AIM just over a week back at 153 pence, has been up as high as 270p and now is fading back to that initial offering price – it’s at 170p at pixel time.
Gelion is a producer of new battery technologies. The name itself is a pun, or play on words – gel and ion which is the underlying idea of the batteries. There are two parts to the technological offerings.
Firstly, zinc-bromide and similar technologies for stationary batteries. This technology is heavy and isn’t therefore suited to transport uses. But given the manner in which both wind and solar are interruptible power supplies – they are not dispatchable – the grid is going to need to have an energy storage option. Batteries are one option for this and zinc bromide batteries on possibility within that more general technology.
The other leg of Gelion’s activities is in additives to make lithium batteries more efficient. Work with lithium-silicon and lithium-sulfur shows great promise in making the transport suitable lithium-ion batteries more efficient. The increasing range, for example, the number of cycles they’ll last for and so on.
This is definitely an exciting part of the technological revolution and it’s possible that Gelion will be a large part of it succeeding. However, technological change is in itself a hugely risky area. For the risk for any one company is twofold. Firstly, will the specific technology being worked upon turn out as expected? Secondly, what is everyone else doing?
It’s that second which really matters too. It’s also not just, well, with some others working on other battery technologies beat to market, or create something better? It’s also which base technology the whole field will gravitate towards. Maybe those mininukes will work and the grid won’t be needing batteries? Perhaps fuel cells – powered by hydrogen which could be seen as “a battery” in the sense of storing energy – will become the transport power of choice. They’re highly likely to for freight transport already.
This isn’t to say that there’s anything wrong with Gelion of its technology, not at all. It’s just to emphasise the risk of working at that bleeding edge of the technological revolution.
That’s a risk that is both incorporated into the Gelion share price and also a risk that will determine it in future. It will be opinions about how the wider market is going that will be a significant part of the price determination. Over and above the actions of the company itself and its progress.
There is also, in this short term, the not unusual IPO effect. Gelion has just come to market. So, there’s been publicity, roadshows, conversations and presentations – these all make the market more aware of what is coming. The IPO was successful, the price rose after it. But once that presentation gloss passes there often enough comes consideration. Thus, we might think, that deflation back to the IPO price.
For the future, a reasonable expectation is price volatility. That’s the usual accompaniment to operating in a risky environment as here. We all know that the work on climate change is going to continue but, well, which exact technology, and who owns it, is going to win out?
Should you invest in Gelion shares?
Gelion shares are traded on the London stock exchange's AIM market (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 GELN shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies