What’s the deal with hydrogen energy stock prices this year?

Many of the most promising companies are seeing low stock prices in 2024 and many investors wonder why.

Stocks for companies that are focused on hydrogen energy – such as its production, the development of technology that uses it, and other related areas – have been up and, quite commonly, down this year. Many are wondering what’s going on with these numbers when this is starting to look like the most promising time in history for this type of fuel.

There are several factors that have played a role in this trend, but it appears that many are temporary.

To start, the factor that has been weighing heavily on just about every industry is the ongoing high interest rates that are making hydrogen energy project financing more expensive. Furthermore, new rules were applied by the Treasury Department and the Internal Revenue Service in December 2023. Those rules were long awaited and now appear to be quite strict, so that many proposed power plants that were awaiting funding may not qualify after all.

Other regulatory issues have also been playing a role, such as those that occurred in California in the solar energy market, particularly when it comes to large companies that had exposure to residential solar space. Though this is not a direct regulation on hydrogen energy, solar is one of the methods of electricity generation used for powering electrolysis when producing green H2. Therefore, projects of that nature in California may have been impacted.

Still, many hydrogen energy stocks are just starting to take off and that trend is expected to continue.

Many projects that still qualify for funding or that have already brought in what they need and are already started are watching the benefits to their stock prices. This is only bolstered as a growing number of known and well-regarded brands throw their hats in the ring. The trend is adding further legitimacy to an area that had previously been seen as very risky.

Furthermore, since the Fed has held interest rates steady since December 2023, that issue is easing and is expected by many to improve in the medium term. In fact, the US central bank has also indicated that this year could see three rate cuts. Should that be the case, it could bolster optimism in areas such as alternative and hydrogen energy that have felt the pinch of recent economic trends.

Growing adoption

Of course, the rise in the number of tests and deployments of hydrogen energy production, technology, and equipment will also play an important role in coming months and years. The more it is available, and the more production occurs at scale, the more competitive it is expected to become, which will be a shot in the arm for those companies.

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