The Helium One share price: is the only way up?

It might be the second most abundant element in the universe, but helium is in short supply down here on earth. And that could mean good news for the Helium One Global (LSE: HE1) share price.

The shares were flying, relatively, back in 2021. But they fell back. And a renewed slump since November 2023 has pushed the price down to low penny levels.

But the price has spiked up in early 2024. So could we be looking at a nice buying opportunity now?

Excitement

First, what’s all the excitement about? Well, the last couple of months have brought a stream of good news.

In February, the company reported positive results from its Itumbula West-1 well in Tanzania. As an aside, who knew they get helium by digging it out of the ground? That seems a bit weird to me.

Anyway, the well produced “a measured concentration up to 4.7% helium,” which is apparently nearly 9,000 times above the background level.

A couple of days after that, the firm announced a successful raise of £4.7m through a stock placement.

Interim

That was topped off by interim results in March.

Chairman James Smith said: “The results from Itumbula can only be seen as transformational for the company; flowing helium concentrations at these levels to surface would position Itumbula in the top section of major helium producing fields.”

So, if it’s transformational, what does that mean investors should do?

Well, in one way, I think it could effectively put us back a year or two, to before a series of disappointments gave the share price a hammering. And something of a restart.

Valuation

The difficulty I have comes down to valuation. Specifically, that I’ve no idea where it should be at.

Forecasts had no profits down for the foreseeable future. They’ll surely have to change now, though, after the Itumbula progress.

But we still don’t know when profit will arrive. Or, perhaps more importantly, how much more cash Helium One might need to raise before we get there.

The company had raised £12.9m in September and December 2023. And we have the latest £4.7m to add to the coffers too.

Enough cash?

The board says it has “sufficient working capital to progress its planning for the next stage of the work programme in Tanzania“.

But that still sounds some way short of putting actual profits into shareholders’ pockets.

There’s penny stock risk here too. And the very low share price coupled with erratic trading volumes could lead to a fair bit of share price volatility.

Buy, or not?

I do think the Helium One share price could be a fair bit higher by the end of 2024. But I still see a few risky years to come. And I couldn’t guess where the shares might be by 2026.

So I’ll keep away, while wishing good luck to growth stock investors who might take the risk and buy now.