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Regardless of the many good news and developments around hydrogen, there must of course also be a critical consideration of the aspects that may, for example, hinder or delay rapid build-up of production capacity. In addition to adverse influences due in part to misunderstood or counterproductive regulatory measures (EU/Germany) are aspects such as the shortage of skilled workers, supply chain problems and financing.The issue of financing is pertinent to, for example, the Australian billionaire Andrew Forrest’s company Fortescue Metals Group, whose hydrogen ambitions could very well require an investment of over 150 billion USD. This sum could overwhelm even him. Moreover, hydrogen will no longer be easily producible in the planned quantities if the electrolysis capacities (PEM, SOFC and alkaline) will not be created in time. On top of that, the transport of the H2 needs to be guaranteed and complete pipelines as well as new ship types in great number need to be built. Everything won’t happen overnight.
The stock market evaluates the future, essentially constitutes an anticipation mechanism, but most shareholders aren’t looking too far ahead. Short sellers, in other words, investors who are betting on prices falling, are pursuing their own interests, e.g. to create uncertainty – if only temporarily, unfortunately still often vigorously and effectively, as can be seen from the currently very weak stock market prices of the companies in the sector discussed here.
At the stock exchange are also, at least temporary, players who are trying to torpedo the hydrogen and fuel cell sector by putting in their say to get fast money out. These may be hedge funds or short sellers close to them whose aims are to put pressure on shares of this theme to realize trading profits via falling prices. This will strengthen their usable capital too – even if temporarily – and devalue prices or entire industries. But in the end, it’s the hard facts and the prospects that count, and they couldn’t be better.
Example: If the value of a company during a trading session drops by 500 million USD with a daily turnover of just 20 to 30 million USD, you can’t really talk of selling pressure. As an investor, you then have to pull through, even if it hurts that the shares of this so important future topic are put under so much pressure, with more or less crude arguments based only on quarterly results and trading strategies. But this will pass, as I think over time companies will deliver what they announce and have themselves forecast. Therefore, it is advisable to follow Warren Buffett in his thinking and invest strategically and for the long term.
Just ask yourself: Is hydrogen (in its various colors) the new future trend in energy and sustainability? Is decarbonization fully possible without hydrogen? Could fuel cells and hydrogen compete with batteries in many areas? How are the companies positioned (balance sheet ratios, orders on hand, etc.)? Which company in the industry has the right product and business model for the future H2 market, and sustainably earns more and more money with it?[…]
… Read this article to the end in the latest H2-International
Warning
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Author: Sven Jösting, written June 11th, 2022
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