Is hydrogen the way forward, or is it too light-weighted?CAPITALCOM:NEL is in a clear downtrend, trading below both the 50-day and 21-day EMA. MACD is near neutral indicating a lack of buying pressure. RSI is around 41 which tells us the stock is not oversold, but also lacks upward momentum. There is resistance at $4.7 and $5.6 (red lines) and support can be found at $3.85 (green line).
There are also some fundamentals indicating future price development. There is growth in revenue from Q3 2023, primarily from the alkaline segment, which also showed improved margins. On the flip side there is a 52% drop in order intake and a backlog decrease of 20%. This elevates uncertainty and risk of delays. Revenues from PEM Electrolyser dropped 40%, with low project deliveries. Fixed costs also weigh on profitability, particularly if demand does not rebound soon. Cash flow from operations is negative.
NEL has been struggling for some time, and the hardship is not over. In my opinion the support will be broken and once that happens there is no floor. My target is just above the psychological £3 and my SL would be somewhere around $5.
