The ITM Power Share Price Has Fallen 54.3% in 2022. Can It Recover?

Key points:
The ITM Power share price has fallen 54.3% in 2022.
However, ITM shares can recover if central bank policies change.
The company could also scale up its operations.

The ITM Power plc (LON: ITM) share price has fallen 54.3% in 2022, but its losses from November 2021 are larger given that ITM shares were trading at 525p. While a significant percentage of the losses can be attributed to the broad market selloff that has engulfed global financial markets, there are other reasons behind the decline.

Also read: Five Best Green Energy Stocks 2022.

First, ITM Power’s valuation has always been a contention among investors. Should the company’s shares be worth billions, yet its revenues for the past financial year were a mere £5.5 million? Many have questioned this valuation, which is why some leading investment banks such as Berenberg have had a sell rating on the stock since last year.

As a leading UK company in the hydrogen energy sector, ITM Power is well-positioned to benefit from the British government’s and the EU’s focus on embracing sustainable energy sources to reduce their dependence on oil, coal, and gas emit hydrocarbons into the environment.

The hydrogen company that manufacturers electrolysers is still firmly on a growth trajectory, as evidenced by the high number of jobs listed on its careers page, compared to other tech firms that are currency downsizing their staff.

However, most investors question whether ITM Power shares will recover? The short answer is yes, ITM shares will rally higher in future. Still, such a move will be driven by a significant change in the current business environment or the company significantly scaling up its operations.

Investors are aware that stock markets across the globe have been falling as most central banks raise interest rates to combat record-high inflation in many countries. However, the banks cannot keep raising interest rates indefinitely as some countries like the US are teetering on the edge of a recession.

A reversal of central bank policies could be one of the primary tailwinds behind a rally in ITM shares. Another tailwind could be the firm generating more revenues by scaling up its operations and increasing customer deliveries. Until then, any rally in ITM’s share price will likely be transitory.

*This is not investment advice. Always do your due diligence before making investment decisions.

ITM Power share price.