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Hydrogen stocks face the same disaster as solar, wind and 3D printing

Given the recent dynamics, hardly anyone can seriously doubt that hydrogen will become a gigantic market. Now everything comes together: The technology is mature and mass production is about to ramp up. At the same time, large-scale industry from all sectors involved is involved, and politics is providing important impulses.

The enthusiasm of investors knows almost no limits. The shares of almost all specialists around fuel cells, pressure vessels and electrolysis have multiplied over the past quarters. However, we have already experienced similar things with comparable topics such as solar, wind and 3D printing. Of course, the comparison may be lagging, but I’m afraid that hydrogen stocks will have a similar outcome.

This is what happened to solar, wind and 3D printing stocks

Wind and solar

Since the 1990s, photovoltaics and wind turbine technology have been intensively promoted in countries such as Japan and Germany. In 2003 the 100,000 roof program started in Germany and in 2008 the amendment to the Renewable Energy Sources Act was passed. At this point, the manufacturing costs and prices fell very quickly, so that the feed-in tariff at the time promised ever higher returns.

Shares such as those of Vestas or First Solar rose within a very short period of time by 500 or even 1,000%. But then came the financial crisis, the previously extremely high oil prices collapsed and the support programs were cut. In addition, at Solar, competition from Asia increased and conquered more and more market shares. In 2012, share prices were lower than before the boom and Q-Cells was insolvent.

Additive manufacturing

3D printing is a topic that was suddenly on everyone’s lips in the early 2010s. The technology had been used by car manufacturers and aircraft manufacturers for many years, especially in prototype construction. But then the engineers invented new areas of application with ever new materials. A pioneering innovation was felt every week. Even organs, food and entire houses should be conjured up by high-tech machines as if by magic.

Additive manufacturing seemed to be the Swiss Army knife of production technology and fired the imagination of investors. From September 30, 2011 to the beginning of 2014, the Stratasys share increased more than sevenfold. 3D Systems was even a 10 excavator. Today, both stocks are trading below the level of autumn 2011. As of 2014, disillusionment has set in.

On the one hand, the devices are still too slow to keep up with conventional mass production techniques, and on the other hand, it has been shown that the few listed specialists are by no means the only ones who can build good 3D printers. Both private and university laboratories as well as large corporations are constantly entering the market with new approaches, thus ensuring intense competition. A dominant player has not yet emerged like this.

This could result in a similar disaster for hydrogen stocks

Solar, wind and 3D printing stocks have plummeted 90% and more in many cases after the hype has subsided after multiplying. Today it is the hydrogen stocks that have multiplied. Many aspects are similar to those of photovoltaics back then: comprehensive state funding, competition from different technologies (crystalline, thin film, concentrator, etc.) and a confusing competitive situation.

As with 3D printing, many solar innovations still come from public research. All of this is the same with fuel cells and electrolysis. Hydrogen companies have the notorious losses in common with the 3D printer manufacturers. The calculation that profits come from the growing market has so far only partially worked out in additive manufacturing. For fuel cells and electrolysers, it could look similar for years to come.

Now that everyone can see that this market is growing enormously, countless companies are rushing to the market to secure the largest possible piece of the cake. For many, however, only a small slice or even a crumb will remain. The intense competition suggests that a buyer’s market will be formed that will keep margins low.

Hydrogen stocks are on the watchlist

There is one more thing that has not been mentioned so far: Vestas shares have increased 24-fold (!) Since the 2012 low. The wind turbine builder is the champion of its industry and is now one of the few manufacturers to have a global production network. It can achieve good margins and is ideally positioned to continue growing for years to come.

This means that it might also be wise to wait for a phase of disillusionment with hydrogen. Only then is the market consolidated and the true champions emerge, who then also earn profits for their shareholders instead of regularly raising capital. That’s why the specialists remain on my watchlist until further notice.

I currently think that 3D printing stocks are in a more interesting phase. Perhaps we could be there next year where Vestas was in 2012. That is why I have been considering for months whether there might be a future 3D printing champion among the listed specialists.

The post hydrogen stocks face the same disaster as solar, wind and 3D printing appeared first on The Motley Fool Germany.

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Ralf Anders does not own any of the shares mentioned. The Motley Fool recommends 3D Systems.

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