Has Nel ASA’s Stock Found Its Floor Amid Mixed Signals?

Norwegian hydrogen technology firm Nel ASA delivered a third-quarter earnings report that painted a complex picture for investors. While the company's revenue declined year-over-year, it demonstrated significant operational improvements that suggest potential stabilization.

Nel ASA continues to navigate challenging market conditions within the hydrogen sector. The company reported customer contract revenue of 303 million Norwegian kroner for the third quarter, representing a 17% decrease compared to the 366 million NOK recorded during the same period last year.

However, sequential performance told a more encouraging story. Quarter-over-quarter revenue surged by 74%, indicating potential momentum building. The most notable improvement appeared in EBITDA, which showed dramatic enhancement from negative 90 million NOK in the prior year to negative 37 million NOK – a 53 million NOK improvement within twelve months.

Key Financial Metrics:
- Q3 2025 Revenue: 303 million NOK (down 17% year-over-year, up 74% quarter-over-quarter)
- EBITDA: -37 million NOK (improved from -90 million NOK year-over-year)
- Net Loss: 85 million NOK
- Order Intake: 57 million NOK (declining 64% year-over-year)

Concerning Decline in New Business

The most troubling aspect of Nel's quarterly report came from the order intake, which collapsed to just 57 million NOK – a 64% reduction compared to the previous year. The company's order backlog similarly contracted to 984 million NOK, reflecting a 47% year-over-year decrease.

Should investors sell immediately? Or is it worth buying Nel ASA?

These figures highlight the persistent headwinds facing the hydrogen industry. Strict European regulatory requirements, particularly the mandate that every hour of energy generation for hydrogen production must come from renewable sources, continue to delay project implementations.

Strategic Alliances Provide Growth Pathways

Despite operational challenges, Nel has been actively forming strategic partnerships with industry heavyweights. Collaborations with Samsung E&A, Reliance Industries, and General Motors aim to accelerate growth trajectories. The partnership with Indian conglomerate Reliance Industries appears particularly promising.

Reliance Industries has announced plans to construct a major electrolyzer manufacturing facility utilizing Nel's technology, with production commencement scheduled for late 2026. This development could significantly advance Nel's alkaline electrolyzer division.

Strong Cash Position Supports Operations

Nel maintains a robust financial cushion with cash reserves totaling 1.76 billion NOK, providing stability despite ongoing operational losses. The company has implemented cost-cutting measures including workforce reduction from 430 to 354 employees, resulting in nearly 60 million NOK in reduced personnel expenses.

Management has expressed cautious optimism, suggesting the worst phase of project cancellations may be over. The company anticipates potentially significant equipment orders between now and the end of 2026, possibly occurring in multiple quarters.