The Great ITM Power Divergence: Institutions Pile In as Retail Investors Cash Out

The numbers tell two very different stories about ITM Power right now. On one side, Jefferies has just lifted its price target to 200 pence from 115 pence, while Morgan Stanley upgraded the stock to "overweight" with a 170 pence target. On the other, retail investors are rushing for the exits, with the hydrogen specialist dominating sell lists on platforms like AJ Bell, where it accounted for roughly one in every fifty trades at the peak of the exodus. On a single trading day, some 13.2 million shares changed hands — a 168 percent surge above the average daily volume.

The divergence is stark, and it all comes down to timing. Private investors who bought in at 30 pence in May 2025 are sitting on gains of nearly 500 percent as the stock trades close to its 172 pence annual high. For them, the question is simple: take the money or risk the June cliffhanger. For institutional investors, the calculus stretches to 2028, when the company is expected to reach operating breakeven.

The June Decision That Changes Everything

At the heart of the near-term uncertainty is a government subsidy decision that could unlock ITM Power's next growth phase. The UK's subsidy watchdog is due to publish its findings on May 26, with a decision on a £46.5 million grant for the company's new Chronos production line in Sheffield. Should the verdict be positive, management plans to take a final investment decision in June.

That £46.5 million is more than just a cash injection — it's the key to the Chronos platform, a next-generation electrolyser that delivers two megawatts per unit, tripling the output of the current system while slashing costs by 40 percent and halving the space required. CEO Dennis Schulz has tied his own compensation directly to the project's timely delivery, receiving a multi-million-pound share package that vests only if Chronos hits its milestones.

Should investors sell immediately? Or is it worth buying ITM Power?

The company has already secured a £40 million strategic investment from Great British Energy in April, but the Chronos grant is the linchpin. Without it, the timeline for scaling up to one gigawatt of capacity by 2028 could slip.

A £200 Million Cushion — But Still Burning Cash

The bull case rests on a balance sheet that looks increasingly solid. ITM Power carries no debt and holds net cash of nearly £200 million, enough to fund operations for more than three years without needing to tap equity markets. Revenue hit a record £18 million in the first half, while the order book has swelled to £152 million. Crucially, 71 percent of those contracts are now considered profitable, a sharp improvement from the loss-making legacy projects that plagued the company in earlier years.

Yet the company is still burning through cash, with operating losses expected to land around £30 million. Zeus Capital analysts point to the strong balance sheet as a buffer, but the losses underscore how early-stage this business remains. UBS remains cautious, keeping a "neutral" rating with a fair value of just 60 pence, while Berenberg recommends buying but trimmed its target to 110 pence. Jefferies, the most bullish, acknowledges the downside risk: in a negative scenario, it sees the stock falling 52 percent.

The Military Angle No One Saw Coming

Beyond the civil hydrogen market, ITM Power is quietly building a second growth engine. The company has teamed up with German defence giant Rheinmetall to develop decentralised synthetic fuel plants — e-fuels designed to supply NATO forces. Electrification is often impractical for military applications, opening up a niche that could prove lucrative as defence budgets across Europe swell.

The partnership adds a layer of strategic value that most hydrogen pure-plays lack. It also diversifies the revenue base away from the notoriously slow-moving civilian energy transition, where project timelines are often hostage to regulatory approvals and subsidy decisions.

ITM Power at a turning point? This analysis reveals what investors need to know now.

What Happens Next

For ITM Power, the next few weeks are binary. The subsidy decision on May 26 will determine whether the Chronos line proceeds on schedule. If the green light comes, the June investment decision follows, and the company can accelerate its commercial rollout. Investors will also be watching for a final investment decision on the Uniper Humber project, another milestone that could validate the company's technology at scale.

Retail investors who have already banked five-bag gains may not want to wait for those answers. But for the institutions raising their targets, the bet is that the June decisions will tip the scales in ITM Power's favour — and that the real payoff is still three years away.

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