Solar Foods: Liquidity risk receded, focus on execution

Translation: Original published in Finnish on 01/29/2026 at 07:45 am EET

The successful 25 MEUR capital raise removes the liquidity risk that has overshadowed Solar Foods, demonstrates partners' and investors' confidence in the Factory 02 investment, and provides management with much-needed leeway to commercialize Solein. We believe the capital raised and the confidence shown by strategic partners and investors in Factory 02 have improved Solar Foods' prospects for implementing an industrial-scale production facility. We have updated the impact of the share issue on our estimates, but otherwise our expectations remain unchanged. We reiterate our EUR 5.3 target price and Reduce recommendation.

The funding round concretizes the future factory investment

Solar Foods raised gross assets of around 25 MEUR in the issue at a share price of EUR 4.85. The anchor investor for the issue was the industrial partner GEA, which subscribed for shares worth 8 MEUR. Solar Foods also signed an exclusive agreement with GEA, under which GEA is responsible for the design, construction, and delivery of process equipment for Factory 02. To our understanding, GEA also supplied the processing equipment for Factory 01, so the companies have worked together before. We welcome GEA’s participation in the share issue, as it validates the industrial partner’s faith in the Factory 02 project. As a result of the share issue, Solar Foods' number of shares increased by around 21% to just under 30 million. Despite the dilutive effect of the issue, we view it positively, as it removed the acute liquidity risk that hung over the company and demonstrates the availability of equity financing.

Credibility for the Factory 02 investment increased

The industrial-scale Factory 02 project has concretized significantly over the past 12 months. Solar Foods has confirmed Lappeenranta as the location for the factory and signed four letters of intent covering 100-120% of the factory's total production volume of 6.4 kilotons for the first two phases. Next, replacing letters of intent with binding contracts is central to the investment case. There is no visibility on the terms of the letters of intent, but we estimate that Solein's novel food authorization in the EU and achieving FDA-notified GRAS status in the US may play a key role in them. In our view, the company aims to achieve both this year. The company aims to make the final investment decision for Factory 02 during 2026, making it an eventful year. Factory 02 plays a critical role in the investment case, as the company's current production volume is insufficient to achieve a profitable earnings level, and we have not yet gained visibility into the development of asset-light licensing revenue. Solar Foods expects production at Factory 02 to begin at the end of 2028, which is in line with our estimates.

For those playing the news flow, the current setup could be favorable

Due to Solar Foods' significant investment needs and cash flows being far in the future, the range of outcomes for the investment case is exceptionally wide. This is reflected in our fair value range, which relies on DCF model scenarios and is set at EUR 3.1-7.4 (was EUR 1.1-10.8, the issue narrowed the value of the scenarios towards the issue price of EUR 4.85). The model's baseline scenario is in line with our target price. Due to Solar Foods' early development stage, news flow and sentiment surrounding the stock will be the key drivers for the share price in the short term. With the liquidity risk removed, the share offers a more attractive investment thesis surrounding the upcoming news flow. While the identifiable share price drivers have led to a more balanced risk/reward, the share appears correctly valued against our fair value range. At the current valuation, this still warrants a cautious stance regarding cash flows in the distant future.