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By lunchtime on 17 July, the Ceres Power Holdings (LSE:CWR) share price was down another 5%. I say ‘another’ because it continues a miserable period for the developer of solid oxide fuel cells, which has seen its stock market valuation crash by nearly 40% over the past month. This makes it the worst performer on the FTSE 250 during this period.
But it hasn’t always been like this. In fact, despite its dismal run, it remains the best performer on the index since July 2025. So what’s brought about this dramatic change? Let’s take a closer look.
Nothing to report
The first thing to note is that the company hasn’t made any official stock exchange announcements. In this case, the old adage that no news is good news doesn’t appear to apply.
However, just over a month ago, the company surprised shareholders by asking them for more money. The offer was oversubscribed and £103m was raised. The group said “the new funds present a clear opportunity to capitalise on commercial momentum for Ceres technology and ensure we are well placed for the future”.
Understandably, there could be a bit of a hangover from this. But it seems unlikely given that the new shares were issued at 570p, 58% more than today’s price.
Shareholders often blame short-sellers when there’s a significant downwards movement in a company’s share price. But although the latest Financial Conduct Authority disclosures show some investment firms have borrowed Ceres shares in the anticipation that they will fall in value, the level of activity doesn’t appear to be particularly unusual.
A more plausible explanation is that some shareholders who have enjoyed an excellent return over the past year or so, have decided to cash out.
Not alone
Another is that there appears to be a sector-wide concern that the technology isn’t being adopted quickly enough.
On the other side of the Atlantic, Bloom Energy and FuelCell Energy have seen their stock prices tumble since June. Closer to home, ITM Power’s share price has also come under pressure.
But developing any new technology is risky. Ceres isn’t profitable – that’s why it had to raise more money. And it’s taken a long time to get to where it is today. It was spun out of Imperial College in 2001. To be honest, another fundraising can’t be ruled out.
My view
However, I think fuel cells could help provide the power that data centres need in abundance, but the existing grid can’t deliver.
And interestingly, Ceres has a capital-light business model that sees it licence the manufacturing of its cells to third parties. This means others carry more of the operational risk. The group’s financial performance over the next 12 months will largely depend on whether a number of high-profile companies in Asia can find customers for the cells. If they can, Ceres will earn substantial royalties with few associated costs.
Looking further ahead, the transition towards cleaner energy generation can only help.
I reckon the recent pullback in the group’s share price could be an exciting opportunity to consider for investors looking to get a foothold in an industry with huge growth potential.
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James Beard owns shares in Ceres Power Holdings plc.
This story originally appeared on Motley Fool
