NET Power, Inc. (NPWR): Legal Headwinds and Project Delays Cloud the Path to Profitability

The stock of NET Power, Inc. (NPWR) trades at $2.92 as of early June 2025, but its trajectory is clouded by a class-action lawsuit, costly delays in its flagship Project Permian, and lingering doubts about its ability to turn losses into profits. For investors weighing whether to buy, hold, or short the stock, these factors—coupled with a stark technical outlook—paint a cautionary picture.

A Lawsuit Adds to the Headwinds
The class-action lawsuit, which accuses NPWR of misleading investors about the feasibility of its carbon-capture technology and Project Permian's timeline, has intensified scrutiny. The lawsuit, with a June 17 deadline for lead plaintiff applications, could amplify volatility if unfavorable rulings emerge. Legal battles often drain resources and distract management, risks that are compounded by NPWR's already tenuous financial footing.

The lawsuit's timing coincides with Project Permian's struggles. The $1.3 billion clean energy project, designed to showcase NPWR's Allam-Fetvedt Cycle (AFC) technology, has faced repeated delays and cost overruns. While the technology's potential to capture 90% of carbon emissions is undeniably promising, its scalability remains unproven. Analysts at Barclays and Citigroup have downgraded or tempered their targets for NPWR, reflecting skepticism about the project's ability to deliver returns.

Valuation Under Pressure
Financial metrics underscore the challenges. NPWR reported a Q1 2025 EPS of -$1.55, far below the -$0.11 consensus estimate, highlighting its reliance on capital markets and partnerships to stay afloat. With a market cap of $635 million and a negative P/E ratio, traditional valuation metrics are unreliable. Instead, investors must focus on NPWR's path to commercialization and cash flow.

The data shows a predicted decline to $2.43 by month-end—a 16.8% drop from current levels—driven by technical indicators like the 200-day moving average ($6.84) and bearish sentiment from long-term traders. The stock's 15.26% 30-day volatility suggests further turbulence, especially if the lawsuit's outcome spooks investors.

Leadership and Liquidity Concerns
While leadership changes aren't explicitly detailed in the data, the confluence of legal and operational challenges may test management's credibility. Institutional ownership at 53.6% offers some stability, but recent shifts—like Deutsche Bank's 63% stake increase—suggest only cautious optimism. Without clear progress on Project Permian or a breakthrough in partnerships, NPWR risks becoming a “story stock” reliant on hype rather than fundamentals.

Is This a Buying Opportunity?
Bulls might argue that NPWR's technology has long-term potential in a carbon-constrained world. The 2030 forecast of $0.86 per share, however, assumes a bleak outcome, while the $6.00 target from Citigroup (down from $14) reflects dwindling confidence. Short-term traders could capitalize on the predicted June decline, but the long-term trajectory remains dire.

The widening gap between the 50-day ($2.04) and 200-day ($6.84) moving averages signals a loss of upward momentum. Technicals favor shorts, while fundamentals lack the catalysts to reverse the trend.

Investment Takeaway
NPWR's stock offers a high-risk, low-reward proposition. The June 17 lawsuit deadline and Project Permian's uncertain fate make it a gamble for all but the most speculative investors. For those considering a position, the following thresholds matter:
- Sell/buy signals: A break below the $2.02 2025 low or a rebound above the $6.84 200-day average.
- Litigation outcome: A favorable ruling could temporarily buoy shares, but structural challenges remain.

In this environment, the prudent move is to avoid initiating long positions unless NPWR delivers concrete progress on Project Permian or secures critical partnerships. Shorts, meanwhile, may find merit in targeting the $2.45 June forecast, though they must stay vigilant for regulatory or operational surprises. For NPWR, the road to shareholder value remains as tangled as its balance sheet.