Nel ASA's Cost-Cutting Bet: Can a Cheaper Electrolyzer Close the Profitability Gap?
Published on 08/15/2026 at 12:33 | Redaktion boerse-global.de
The arithmetic at Nel ASA has rarely looked more contradictory. Orders are flooding in at a pace that would flatter most industrial companies, yet the income statement keeps bleeding red. That tension — between a swelling pipeline and stubbornly negative earnings — now sits at the heart of the investment case for the Norwegian hydrogen group, and it was the explicit reason behind JPMorgan's latest move.
On August 5, the U.S. bank trimmed its price target on Nel to 1.80 Norwegian kroner from 2.90, holding the stock at Neutral. The rationale, as reported the following day, was straightforward: weak profitability continues to overshadow what was, by any measure, an exceptional quarter for order intake.
The numbers tell the story. In the second quarter of 2026, Nel's order intake surged 224 percent to 230 million Norwegian kroner, lifting the total backlog to 1.213 billion kroner. Revenue from customer contracts, however, fell 12 percent to 153 million kroner, while EBITDA landed at minus 155 million kroner — a shortfall that underscores just how far the company remains from turning its commercial momentum into actual profit.
For JPMorgan, the calculus appears to be less about demand visibility and more about timing: when, precisely, does all that backlog start translating into sustainable margins?
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A New Platform, A New Cost Structure
Management's answer, in part, is a new generation of pressurized alkaline electrolyzers that Nel says has now reached market readiness. Unveiled in May 2026, the system is designed to bring turnkey costs for 25-megawatt installations below $1,450 per kilowatt — a reduction of 40 to 60 percent compared with conventional solutions. That is not a marginal improvement; it is a structural shift in the unit economics of the company's core product.
The cost story is deliberately tied to scale. At the Herøya site, Nel is targeting 500 megawatts of capacity by the end of 2026, with plans to double that figure again in 2027. The logic is straightforward: cheaper electrolyzers, produced in much larger volumes, should eventually allow Nel to grow without further eroding its margins. Whether that logic holds in practice is the question the market is now weighing.
The CEO Transition Fades Into the Background
The leadership change that dominated headlines a month ago has, for now, receded into the margins. CEO Håkon Volldal is set to depart for Elopak, remaining in his role until year-end while the board searches for a successor. Since the announcement, the stock has gained 1.2 percent — a muted response that suggests investors have largely priced in the transition and are focusing instead on operational execution.
That relative calm stands in contrast to the broader price action. The shares closed Friday at €0.2025, roughly 45 percent below their 52-week high of €0.3655, reached on May 25. The stock sits about 3.8 percent under its 50-day moving average of €0.2105, and 5.5 percent below the 200-day average of €0.2142 — a picture of persistent softness rather than outright panic.
One technical service recently upgraded the stock from "Sell" to "Buy Candidate," though such signals carry limited weight given the fundamental uncertainties still in play.
A Strategic Niche, A Distant Payoff
Nel's positioning extends beyond electrolyzers themselves. A recent industry report on the electrochemical ammonia synthesis market lists the company alongside Yara, Fortescue, and Technip Energies as one of the key global players. The segment is projected to reach $14.7 billion by 2035 — a figure that speaks to Nel's strategic relevance in the broader hydrogen and ammonia ecosystem, even if it does not represent an immediate revenue stream.
What the Autumn Will Reveal
The market's focus now shifts to October 21, when Nel publishes its third-quarter report. That will be the first real test of whether the new platform's cost advantages are showing up in the numbers — and whether the order backlog is finally converting into revenue growth.
Until then, the stock appears range-bound, trading between the February low of €0.1731 and the May peak, with no clear breakout in either direction. The central question for investors remains the one JPMorgan flagged: order momentum is real, but profitability is not — and bridging that gap is now the company's defining challenge.
