Solaria Update
A giant in the making
Solaria is one of the leading renewable energy companies in Europe, created in 2002 by its current CEO and IPOed in 2007. It suffered the consequences of the major renewable energy crisis in Spain (during the years of the global financial crisis), which forced it to transform into an IPP. Historically focused on photovoltaic energy in Spain, it is also present in Portugal, Greece, and Italy. It was really in 2019 when it began its growth phase. In just over 5 years, combining ambitious goals and the best execution in the sector, it multiplied its installed capacity by 20 times, going from 75MW at the end of 2018 to the current 1658MW (without the need of any capital increases).
In recent years, due to the saturation of solar energy in Spain (its main market by miles), it has diversified into wind projects (UK) and initiated storage projects, which it will begin to connect in the next 3 months.. Similarly, it has launched an infrastructure division to own the land where renewable projects are developed (StonePeak recently acquiring 50% of that business at a €250 million valuation ) and has focused on the opportunity in Data Centers, where it expects to capitalise on the high demand from technology companies and are positioning themselves as the referent go-to player in Europe to support tech companies.
However, after peaking in 2021 (surpassing €3 billion in market cap), the company plummeted to the depths, trading at under €700 million. A combination of industry headwinds and significant delays in project commissioning (they haven’t connected a single new MW to production in the last 21 months. This is overshadowing the progress in the company’s new divisions—Infrastructure, Data Centers, and the Storage segment—and attracting short sellers to its stock.
It was then, earlier this year, that we wrote our investment thesis on the company, which we have been closely following ever since. During this period, we have published updates highlighting both its extreme undervaluation and the market’s outsized positive reaction to the share buyback announcement, which drove the company’s value up by more than 100% in just three months
Today, we are taking advantage of the earnings release to analyze its current situation, update its valuation and share our thoughts about the company.