Nel ASA's Cost Gains Are Real, But a 73% Order Slump Keeps the Story Incomplete

For a company that just rolled out a next-generation pressurized alkaline platform and trimmed its operating loss, Nel ASA is having an unusually hard time holding investor attention. The Norwegian electrolyser maker's shares swung sharply this week, giving back gains that had built up over a month-long rally, as the market zeroed in on a glaring weakness: new orders have all but dried up.

First-quarter numbers released earlier in May reveal a company caught between genuine operational progress and a demand environment that refuses to cooperate. Revenue from customer contracts slipped 5 percent year-on-year to NOK 148 million, while the EBITDA loss narrowed to minus NOK 100 million from minus NOK 115 million a year earlier. That 15-million-kroner improvement in operating performance is the kind of trend management would normally highlight. But it was completely overshadowed by the order intake: just NOK 85 million in the first quarter, a staggering 73 percent decline from the prior year and a clear sign that project awards have stalled.

The order backlog consequently shrank 24 percent to NOK 1.113 billion, leaving Nel to rely on its cash pile of NOK 1.443 billion to fund the industrialization push. Management has pointed to geopolitical tensions in the Middle East as a factor delaying final investment decisions, but the market is demanding more concrete traction.

Divergent performance inside the segments

A closer look at Nel's two main divisions shows why the cost story is both compelling and incomplete. The alkaline business, which includes the legacy atmospheric technology and now the new pressurized line, posted a 6 percent rise in revenue and a 35-million-kronor improvement in EBITDA. That segment is the engine of Nel's profitability ambitions. However, the PEM division went in the opposite direction: revenue fell 14 percent and EBITDA landed at minus NOK 16 million. The contrast means investors cannot assign a uniform valuation to the group — alkaline is proving its mettle while PEM remains a drag.

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This split helps explain why the stock has been volatile despite underlying cost reductions. After gaining roughly 6 percent on Monday, the share price collapsed 11.88 percent on Tuesday, closing at NOK 3.01 in Oslo. By Wednesday, the slide continued on Tradegate, where the stock traded at EUR 0.28, down 5.15 percent from the previous session. The monthly chart still shows a 20 percent gain, but the momentum has clearly ebbed.

Technology milestone lands in a quiet market

Nel's most significant recent announcement — the commercial launch of its pressurized alkaline electrolyser platform after more than eight years of development — came on May 6, but the market response has been muted. The system targets a cost of under USD 1,450 per kilowatt for a 25-megawatt installation, a figure that, if achieved, would undercut many competing technologies on levelized cost of hydrogen. The platform is being industrialized at the Herøya site, where Nel is aiming for 500 megawatts of annual capacity by year-end. That is the first step toward a longer-term goal of 1 gigawatt, with an eventual stretch target of 4 GW.

The European Union's Innovation Fund is backing the scale-up with up to EUR 135 million, covering as much as 60 percent of eligible costs. For the current quarter, Nel expects to receive an initial EUR 11 million tranche, which would provide a modest liquidity boost.

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To align the cost base with the weak pipeline, Nel has cut headcount by 26 percent from its peak, leaving around 300 employees. The restructuring is part of a broader effort to ensure the organization does not outgrow the order book.

Overbought or oversold? The technical picture sends mixed signals

The stock's relative strength index has plunged to 16 — deeply oversold territory on any technical framework. That reading often precedes a bounce, and Nel's year-to-date gain of roughly 44 percent suggests short-term traders have profited handsomely during the rally. But oversold conditions do not fix the fundamental problem: without a sustained recovery in order intake, cost reductions alone cannot support the current valuation. The next major test comes with the second-quarter results, where investors will watch for signs that delayed projects are finally converting to firm contracts. Until then, Nel's story remains a bet on technology and timing — with the scorecard still very much open.

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