Solaria: The Entry Signal That Saw Shares Multiply Tenfold From €0.27

Solaria: From a Penny Stock at €0.27 to a Renewable Energy Rally

In early 2019, Solaria's stock was trading around €4.30. The company had just sealed an alliance with Repsol, causing its shares to rise 7.8% in a single session, and had previously seen its profits soar by 214% to €18.52 million over nine months. Anyone looking at it today sees a renewable success story. However, back in 2013, it was considered a penny stock trading at €0.70, with the company teetering on the brink of collapse.

The journey between those two points—from €0.27 to nearly €7—is the true essence of the Solaria case. It's also why most investors who got in low couldn't hold on until the peak.

The Technical Signal Pointing to €0.70

The entry argument was textbook: an accumulation triangle that had been forming for months, signaling an imminent upward surge. The target was to break the €1 mark. The first session saw an 8% jump, and the thesis seemed to confirm itself.

However, the same analysis warned of a prior correction, a two-day flag pattern with a floor at €0.70, suggesting a rotation of capital to another emerging stock. This is where the musical chairs began: half a dozen investors sold Solaria at a 1% loss to buy Codere, which was rising more rapidly. Those who held on from €0.97 recall the operation differently. For those who bought at €2.40 or €2.80, simply voicing their intention was enough for anyone to state the obvious: sell now.

The Error of Round Targets

This is the most frequently repeated lesson. The €4.16 target became a cage: when the stock reached the midpoint of its projected rise, no one sold because the other half was still missing. Shares were bought at €1.18, and more were added on the way up and down, pushing the average cost above the current price. The result was that the least informed person at the trading desk—the one who didn't know what a stop-loss was—was the one who was right. In the stock market, this isn't an anecdote; it's the diagnosis of a manipulated stock.

The numbers from the operation remain uncertain. Those who sold at €1.95 after buying at €1.20 made money. Those who entered between €1.15 and €1.40 had a cushion to maintain their position. Those who arrived late did not.

From €24 to €0.27: The Fall That Nearly Killed It

It's important not to forget the longer history. Solaria debuted in 2007 at €9, surged 25% on its first day, peaked around €24, and in a few years plummeted to €0.27. It narrowly avoided bankruptcy and was relisted at €0.75 before changing its business model. This fact debunks any epic narrative: the same company now presented as a multinational was trading at cents just over five years ago.

The recovery didn't come from nowhere. Some attribute it to six factors, four of which were external to management: the drop in construction costs, the elimination of the sun tax (a tax on solar energy generation), the European Central Bank's quantitative easing, and asset refinancing. The two internal factors were management decisions: a capital increase at a high range and the closure of the panel factory.

The Numbers Separating Solaria From Its Competitors

Comparing its market capitalization to its profits places it favorably. With €18.52 million earned in the first nine months of 2018 and a €537 million market capitalization, it holds its own against Solarpack—€5.4 million profit in 2017 and €400 million valuation—and Audax, with €4.18 million in six months for a €228 million valuation. The market is pricing in expectations, not cash flow.

This is where analyst firms come in: GVC Gaesco Beta and JB Capital recommended buying with target prices of €7.50 and €8.50. The stock had appreciated 163% that year and over 40% since October alone. The entire sector was moving: Grenergy was closing plants in Chile with Daelim, Greenalia saw a 10% rise in one session, and Amper joined the trend.

The ERTE That Cut Salaries by 16%

Amidst the rally, Solaria signed a nine-month temporary employment regulation file (ERTE) and a 16% salary reduction for one year. The agreement avoided the dismissal of 71 employees and halted a collective redundancy process for another 110. The immediate interpretation was that cutting one of the heaviest costs improves the income statement. However, the key factor remained external: international contracts—90% of projects and demand, according to reports at the time—and a regulatory framework that would once again favor renewables in Spain.

Where the Analysis Gets Stuck

With the stock at €4.30 and testing resistance again, opinions diverged between those who saw 700 MW of installed capacity by the end of 2019 and targets of €9 or €10 for 2021, and those who insisted that few stocks are as manipulated as this one. Both could be true simultaneously. The company, which was once worth €0.27 and another day €24, still doesn't provide a clear answer about what is actually being bought: a solar business with tailwinds or a horse that consistently wins the racetrack each quarter.

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Disclaimer: this article is for informational purposes only and does not constitute investment advice.