How to Trade Nel ASA Stock: NEL.OL Share Price Trading Guide

Nel ASA (NEL.OL) is a long-established company in the hydrogen industry, specialising in producing, storing, and distributing hydrogen from renewable sources. Listed on the Oslo Stock Exchange, Nel ASA has become a prominent name in the global push towards cleaner energy solutions, attracting traders interested in the growth of the hydrogen sector.

Market conditions, financial performance, and strategic partnerships influence NEL.OL stock. Understanding these factors is essential for traders who want to navigate the stock's price movements and capitalise on potential opportunities in this rapidly evolving market.

Read on to explore what drives Nel ASA's shares and how traders can speculate on its price movements.

TL;DR

• Nel ASA is a Norwegian hydrogen company specialising in renewable energy solutions and is publicly traded on the Oslo Stock Exchange.
• Market conditions, financial performance, and strategic partnerships influence NEL.OL's share price.
• Traders can engage with Nel ASA's share price movements without owning the actual shares through contracts for difference (CFDs) but should be aware of potential losses due to market fluctuations and leverage.

Nel ASA Company Overview

Nel ASA, founded in 1927 and headquartered in Oslo, Norway, is a prominent player in the hydrogen industry, specialising in solutions for producing, storing, and distributing hydrogen from renewable energy sources. The company went public on the Oslo Stock Exchange on 21 April 2019 under the ticker NEL.OL.

Nel ASA is organised into two main divisions: Nel Hydrogen Fuelling, which develops hydrogen fuelling stations for electric vehicles (EVs), and Nel Hydrogen Electrolyser, focused on the production of hydrogen through alkaline and proton exchange membrane (PEM) electrolysis technologies. The company's name change from DiaGenic ASA to Nel ASA in 2014 marked a strategic shift towards its focus on hydrogen technology.

Nel's primary products include electrolysers that convert renewable energy into hydrogen and fuelling stations designed for hydrogen-powered vehicles.The company operates production facilities in Herøya, Norway, and Wallingford, Connecticut, in the U.S., where it manufactures these systems. These facilities support a range of industries, such as transportation, refining, and energy, making Nel a key player in the transition to green hydrogen.

Nel has built on its leadership in hydrogen technology through strategic partnerships and investments in research and development (R&D). For example, Nel has partnered with Reliance Industries to licence its electrolyser technology. This agreement allows Reliance to manufacture Nel's alkaline electrolysers for internal use and external customers, particularly in the Indian market.

Additionally, Nel has secured significant funding from the U.S. Department of Energy (DOE) to advance hydrogen technologies. These efforts are part of Nel's long-term strategy to drive innovation and expand its global presence in the hydrogen market.

Nel faces competition from other companies in the hydrogen technology space, including Power to Hydrogen, Hydrogenious LOHC Technologies, and Cipher Neutron, all focused on various aspects of hydrogen production and storage solutions.

Trading NEL.OS Shares Through CFDs

One way to speculate on Nel ASA (NEL.OL) share price movements is by trading contracts for difference. CFDs allow traders to gain exposure to price fluctuations without owning the underlying asset. Whether Nel's share price rises due to increased demand for its hydrogen electrolysers or falls following shifts in market sentiment, CFDs enable you to trade by opening either a long (Buy) or short (Sell) position depending on your market outlook.

CFD trading also offers leverage, meaning you can control a larger position with a smaller capital outlay. For instance, if Nel secures a major contract like its 2016 hydrogen fuelling station deal with the City of Mariestad in Sweden, traders may open long positions anticipating a price increase.

However, while leverage amplifies potential gains, it also increases the risk of greater losses, making risk management essential for CFD traders.

What Drives NEL.OS Share Price?

Understanding the factors driving Nel ASA's share price can provide valuable insights into the stock's potential movements. While stock market conditions, financial performance, and strategic decisions play significant roles, other influences, such as broader economic trends and the commodity market and emerging technologies, can also affect the stock's performance.

Market and Economic Conditions

Market and economic conditions can significantly influence Nel ASA's stock performance. External factors such as government policies, global economic trends, and raw material prices can affect the company's operations.

Government regulations and decarbonisation initiatives largely drive the renewable hydrogen market in which Nel operates. For instance, government programs like the Inflation Reduction Act in the U.S. and the European Union's Hydrogen Bank have supported the hydrogen industry's growth. These policies can increase demand for Nel's electrolysers, potentially increasing stock prices as the company benefits from new projects and government incentives.

However, market volatility and economic downturns can negatively impact the stock. During periods of economic uncertainty, such as the disruptions caused by the COVID-19 pandemic, Nel faced challenges in order intake and revenue recognition, contributing to stock performance declines.

Additionally, fluctuations in raw material prices and interest rates can make renewable hydrogen projects more expensive, potentially slowing demand and negatively influencing Nel's stock price. Thus, while favourable market conditions can create growth opportunities, adverse economic factors can lead to setbacks for the company's share value.

Financial Performance

Financial performance significantly affects Nel ASA's stock price, with revenue growth, profitability, and order intake playing crucial roles. For example, Nel's revenues increased in 2023, up 78% from 2022, positively impacting trader sentiment and supporting share price growth. A solid financial performance typically correlates with an increase in Nel's stock price as traders respond to higher revenues and a pathway towards profitability.

However, financial setbacks can negatively impact stock prices. For instance, in the second quarter of 2024, Nel's revenues dropped by 10% year-over-year following the spin-off of its fuelling division, leading to lower volume deliveries of electrolyser equipment.

Additionally, fluctuations in the company's order backlog and cash balance can cause uncertainty in the market, potentially leading to a decline in stock value. These financial challenges demonstrate that underperformance or financial strain could negatively influence Nel's stock performance.

Strategic Decisions and Partnerships

Strategic decisions and partnerships can significantly influence Nel ASA's share price. For instance, partnerships with companies like electric vehicle maker Nikola Corporation (NKLA) have positively impacted Nel's stock. This was evidenced by a $30 million purchase order for electrolysers in 2020, which supported hydrogen infrastructure development in the U.S.

Moreover, reworking deals can also influence stock performance. In 2024, the cancellation of a previous Nikola agreement, followed by a new $9 million deal and a separate $11 million contract with Fortescue Metals (FMG.CHA), saw Nel's stock rise by 7.3%. These collaborations often drive trader confidence, boosting stock prices as the company secures lucrative deals and expands its market reach.

On the other hand, strategic moves like the spin-off of Nel's fuelling division, Cavendish Hydrogen, can lead to mixed market reactions. The spin-off, aimed at focusing on Nel's core electrolyser business, unlocked shareholder value but also introduced uncertainty. As of mid-2024, the planned separation of the fuelling division had raised expectations and concerns among traders, with stock fluctuations reflecting the market's anticipation of this strategic change.

Conclusion: Understanding How to Trade Nel ASA Stock

Understanding the factors driving Nel ASA's stock price can provide valuable insights for traders. Elements such as market conditions, financial performance, and strategic decisions significantly shape the stock's value, creating opportunities and challenges for those who engage with it.

For traders interested in Nel ASA, monitoring these influential factors can help identify potential price movements and inform your trading strategies. This offers a way to capitalise on the renewable hydrogen market's growth. CFD trading also provides a flexible way to speculate on these price movements without directly owning the shares, allowing traders to react to market shifts.

If Nel ASA CFD trading appeals to you, you can start trading NEL.OS CFDs with Plus500.