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ITM Power Shares Have Fallen 36.2% Since January on Sour Mood, Will They Keep Falling?

Simon Mugo trader
Updated 24 Mar 2021

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Shares of ITM Power plc (LON: ITM) have fallen 36.2% since January as some analysts turned bearish on the company since it is valued at £2.74 billion despite not generating any income in the past.

The company, which manufactures hydrogen electrolysers, recently opened a gigafactory in Sheffield with the capacity to manufacture up to 1,000 megawatts worth of ITM Power products each year.

Things are looking up for the company. It was recently recruiting about 80 engineers to work at its gigafactory with analysts at J.P.Morgan, expecting the company to turn earnings positive by the 2023 full year.

J.P.Morgan recently begun covering the company with their first research note clarifying that the global demand for hydrogen electrolysers is set to grow significantly up to 2030, with ITM Power being well-positioned to capitalise on this trend.

From a fundamental point of view, ITM Power is overvalued given that its 2020 revenues were a meagre £5.4 million, but that was before the gigafactory went online.

ITM Power rallied higher towards the end of last year and into January, forming the now-familiar parabolic shape followed by the current downtrend.

The shares seem to have hit a resistance level earlier this month, they bounced from this level but are now heading lower, and I’ll be interested to see if the level holds in future, which could mean that the trend is about to reverse.

A trend reversal here will provide a great buying opportunity for short-term traders who want to profit from moves in either direction.

ITM Power share price.

Tradingview chart of ITM Power share price 16-03-2021

ITM Power shares have fallen 36.25% from their January high of 720p to their current price of 459p. Will it keep falling?

Should you invest in ITM Power shares? ITM Power shares are traded on the AIM market of the London stock exchange (the alternative investment market) which is the sub market 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 ITM Power shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

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