As the dust settles on the glory days of ITM Power (LSE: ITM) shareholders, reminiscing about the share price topping £6 in 2021 feels like a distant memory. Fast forward to the present, and the share price has plummeted by 40% over the past five years, now trading for mere pennies.
Despite the downward trend, could there be a glimmer of hope for investors looking for a long-term bargain in this once high-flying company?
- Focusing on Success: ITM’s recent strategic shift towards a more focused approach seems to be paying off. The company has zeroed in on key areas where it believes it can excel, shedding costly distractions along the way. This newfound focus has translated into tripled revenues of £16.5m last year, signaling a step in the right direction. While the pre-tax loss remains a concern, this decreased by 73% year-on-year, indicating improved cost management.
- Ongoing Progress: ITM Power is not resting on its laurels. Amid recent milestones achieved, the company expects further revenue growth this year. Significantly, its performance in the current financial year reflects revenue close to the full 12 months of the previous fiscal year, showcasing consistent progress.
- Promising Technology: Like its UK green energy counterparts, ITM holds promising technology that reflects in its growing sales figures. However, the lingering uncertainty surrounding the company’s commercial scalability remains a key concern. Achieving sustainable profitability at scale is crucial to substantiate its long-term viability.
While the allure of the stock reaching £6 again might be a distant dream without significant business performance improvements, the potential for a bargain investment lingers. The risks associated with ITM Power’s unproven commercial model and ongoing cash burn temper the enthusiasm for now.
In conclusion, while ITM Power holds promise in the green energy space, the road to sustained profitability is a challenging one. Investors should tread cautiously, waiting for concrete evidence of a sustainable business model before diving in. The lure of past heights may fade, but the potential for a brighter future remains, albeit with a dose of skepticism.
