Soluna Holdings (SLNH) Stock Valuation: $123M of Preferred Stock Ahead of a $0.70 Share

Soluna Holdings builds power-backed data centers, mainly for bitcoin miners, and wants to turn its energy sites into AI data centers. In the first half of 2026 it sold about $135 million of new common stock to build the balance sheet, which is why it has cash. The shares have still lost 78% of their value in twelve months. On October 26 the stock closed at $0.52, and three days later at $0.70, a rise of 34% that followed an announced AI partnership with Applied Digital, though I cannot confirm the cause, and I do not think the assets behind the shares justify that move.

At $0.70 on October 29, 2026, the shares trade at 3.3 times my Base value of $0.21, so the Base is 70.0% below the price. The Bear value of $0.04 is 94.3% below the price and the Bull value of $0.81 is 15.7% above it. I assign no probabilities to the cases. The required margin of safety of 60% gives a buy range of $0.08 to $0.09 and a conservative limit of $0.08. For existing holders this is a sell, because the price rewards plans that are not yet contracts. For new money there is nothing to buy at this price.

Valuation route: Pre-profit infrastructure developer, valued as the sum of its parts with a net asset value method. Economic classification: not assessable, because operating results are negative and the AI business has no revenue. Primary method: cash, operating assets and a risk-adjusted value for the AI pipeline, less debt, the preferred stock and other claims. Cross-check: estimated common book value. Values are present fair-value estimates, not 12-month price targets.

What Soluna is

Soluna develops data center sites next to wind and other power sources in Texas and elsewhere. About 192 megawatts are operating at three energized sites. Customers such as Bitdeer and Galaxy Digital rent space and power to mine bitcoin, and Soluna earns hosting fees. It also owns the 150 megawatt Briscoe Wind Farm, bought on April 1, 2026 for a base price of $53.0 million, and has bought larger stakes in the Dorothy 1A and 1B projects.

The company's pitch is the next step: AI computing. It has plans for a 300 megawatt campus at Dorothy 3, where a partner is expected to hold 51% of a joint venture, a 100 megawatt first phase at Kati 2 with Metrobloks, and a partnership with Applied Digital for a wind-powered AI data center in Texas. It describes a development pipeline of about 6.3 gigawatts, of which about 1.6 gigawatts is in planning and development and 4.5 gigawatts is still in assessment with power partners.

None of the AI projects has a disclosed customer contract with a price, a start date or a cost, so the pipeline is a set of options and not a backlog.

The latest quarter

Second quarter 2026	Result	Comment
Revenue	$15.06 million	up 145% from $6.16 million; 73% excluding a presentation change
Data hosting	$12.65 million	the core of the business
Cryptocurrency mining	$1.72 million	down from $2.86 million
Wind energy and demand response	$0.69 million	$0.37 million and $0.32 million
Gross profit	$0.77 million	about 5% of revenue; $1.9 million in the first quarter
Adjusted EBITDA	-$1.56 million	-$2.09 million in the first quarter
Net loss	$22.6 million	$20.7 million to Soluna, $0.18 a share
Operating cash flow, first half	-$11.6 million	before $9.5 million of equipment and $25.3 million for project stakes

Revenue grew fast, but almost all of it is passed through as power and operating costs, leaving a gross profit of $0.77 million on $15.06 million. At this margin, growing the hosting business adds revenue without adding much profit. The company gave no guidance.

What the earnings are made of

Reported earnings are driven by non-cash items and financing costs. Adjusted EBITDA was a loss of $1.56 million, while EBITDA was a loss of $14.3 million, so about $12.7 million of the difference is adjustments that the release does not break out.
Hosting is a thin-margin business. One project, Dorothy 1A, produced $2.9 million of revenue and $0.8 million of gross profit in the quarter, a margin of 28%, but the consolidated margin was about 5%.
The company is funded by selling shares. In the first half, it raised $113.5 million through its at-the-market program, $18.9 million through an equity line with YA II PN, $2.6 million from warrants and $24.5 million of notes, and about $23.6 million more under the at-the-market program after June 30.

There are no earnings to capitalize, no free cash flow and no dividend on the common shares, so I value the company on its assets and its options.

Capital, debt and shares

Item	Value
Cash, June 30, 2026	$113.4 million, plus $17.9 million restricted
Cash today (my estimate)	about $100 million
Debt principal after the Generate Capital repayment (October 26)	$9.2 million, down from $37.9 million
Contract termination liability	$19.3 million
Series A preferred stock, 9% cumulative perpetual	4,920,045 shares at $25, or $123 million
Total equity, June 30, 2026	$210.4 million, of which $155.9 million to Soluna holders and $54.5 million non-controlling interests
Common shares outstanding	225.8 million at June 30; about 246.7 million now
Series C warrants	exercisable at $1.65 a share

My cash estimate takes $113.4 million at June 30, adds the $23.6 million raised since, subtracts the $28.7 million paid to Generate Capital and about $8 million for the third-quarter burn and spending. The company did not state its cash after the repayment, so this figure is an estimate, and each $10 million of error moves the Base by about $0.04 a share.

The preferred stock is the largest claim ahead of the common. It carries a 9% cumulative dividend, about $11 million a year, and a liquidation preference of $123 million. I deduct the full preference. Stockholders were asked to raise the authorized common shares from 375 million to 1 billion and to approve issuing more than 20% of the shares under the equity line. I did not confirm the result of the October 16 vote, but the company has shown that it will issue shares whenever it can.

Primary valuation: net asset value

Base case	Value	How I get it
Cash	$100 million	my estimate for today
Operating assets (attributable)	$75 million	about $0.4 million a megawatt on 192 megawatts, less the share of minority partners; my estimate
AI pipeline (option value)	$60 million	about $0.15 million a megawatt on about 400 megawatts, my estimate
Less debt	-$9.2 million	principal after the October repayment
Less termination liability	-$17 million	$19.3 million on the balance sheet, discounted
Less preferred stock	-$123 million	liquidation preference
Less capitalized corporate costs	-$30 million	five years of the net operating drag, my estimate
Equity value for common shareholders	$55.8 million	$0.22 a share on 256 million shares

I use 256 million shares, which is the 246.7 million now plus about 4% for further issuance before the projects pay. I do not count the $17.9 million of restricted cash, which is tied to projects, and I give the Series C warrants no value because their exercise price is more than twice the share price. The value of the operating assets and the pipeline are the two inputs that matter, and both are judgments, since the company does not disclose their replacement cost or the economics of the AI plans.

Operating assets	AI pipeline $0	$60 million	$150 million	$250 million
$40 million	$0.00	$0.08	$0.43	$0.82
$75 million	$0.00	$0.22	$0.57	$0.96
$130 million	$0.20	$0.43	$0.78	$1.17

The $0.70 price is reached only in the right-hand cells, where the AI pipeline is worth $150 million to $250 million and the operating assets are worth at least $75 million. Everything on the left, where the plans do not turn into signed contracts, is worth well under half the price.

Secondary valuation: common book value

Stockholders' equity attributable to Soluna was $155.9 million at June 30. If the preferred stock is carried at about $120 million, my estimate, the common part is about $36 million. Adding the $23.6 million raised since and subtracting about $10 million of loss gives about $49.5 million, or $0.19 on 256 million shares. I apply 1.0 times.

This check is not independent of the first: both start from the same cash and the same assets and both deduct the same preferred stock. It confirms the arithmetic of the balance sheet and nothing more, and I give no extra Confidence for the agreement.

Historical cross-check

The shares are down 78% over twelve months and 40% this year, and the broker chart shows a fall from above $30 in 2023. The company has had to sell shares to fund the business, and the share count has risen from 225.8 million at June 30 to 246.7 million now. The 34% rise over three days came with an announced partnership, and I found no new financial result behind it. I did not collect a multi-year history of the price to book value, so the historical component of the valuation score is neutral.

Valuation triangulation

Primary (net asset value): $0.22, weight 60%.
Secondary (common book value): $0.19, weight 40%.
Divergence between the two in the Base: 12.1% of their midpoint, inside the 20% limit, though it is small because both use the same balance sheet.
Weighted Base: $0.21.

In the Bear and Bull the methods differ by far more than 30%, because the net asset value moves with the value of the pipeline and the book value does not. That flags the very wide range of outcomes rather than a disagreement about the Base.

What is the market already pricing in?

Reverse valuation	Result
Equity value the price implies	about $179 million on 256 million shares
Value of the AI pipeline needed, other Base inputs unchanged	about $183 million, three times my Base
Per megawatt on about 400 megawatts of planned AI capacity	about $0.46 million (my Base $0.15 million)
Return on common if the Base is right	a loss of about 70%

A buyer at $0.70 is paying for AI contracts that have not yet been signed, at a price of about $0.46 million per megawatt of capacity that exists only as a plan. There is no earnings yield or dividend to hold the price up while waiting.

Bear, base and bull scenarios

Case	Net asset value	Book value check	Blended	Versus price
Bear	$0.00	$0.10	$0.04	-94.3%
Base	$0.22	$0.19	$0.21	-70.0%
Bull	$1.15	$0.29	$0.81	+15.7%

Bear: cash of $90 million, operating assets worth $40 million, no value for the pipeline, a termination liability of $19.3 million, corporate costs of $40 million and 300 million shares after more issuance. The claims ahead of the common exceed the assets, and the net asset value is zero because shareholders cannot lose more than their investment. The book check uses 0.5 times.
Base: as described above.
Bull: operating assets worth $130 million, the pipeline worth $250 million, corporate costs of $20 million and 270 million shares. The book check uses 1.5 times.

Even the Bull case is only 15.7% above the price, while the Bear is 94% below it. The asymmetry is as poor as it can be, and it comes from the preferred stock: every dollar of asset value up to $123 million goes to those holders before common shareholders see anything.

How the buy price is set

Confidence is D, which calls for a margin of safety of 50% or more. I use 60%, because the critical inputs are estimates, the company depends on selling shares, and the preferred stock leverages every change in asset value. The margin is applied once, to each method.

Method	Value	Buy price at a 60% margin
Net asset value	$0.22	$0.09
Book value check	$0.19	$0.08
Weighted Base	$0.21	$0.08

The conservative limit is $0.08 and the range is $0.08 to $0.09. The shares are far above it, so the verdict is Sell and not Hold.

Dividend and buybacks

The common shares pay no dividend and there is no buyback. The company pays about $11 million a year to the preferred holders. The share count rose by about 21 million between June 30 and today, and I expect further issuance.

Reasons to own SLNH

192 megawatts of operating capacity and a wind farm that gives the company control of part of its power supply.
About $100 million of cash and debt principal of only $9.2 million after the October repayment.
A large, power-backed development pipeline, with partners named for Dorothy 3, Kati 2 and a Texas AI data center.
Hosting revenue is growing, and Kati 1's 48 megawatts were filled by Galaxy Digital, with a further 35 megawatts agreed with Bitdeer.

What could go wrong?

More shares are issued at low prices, which dilutes holders. The company may issue more than 20% of its shares under the equity line.
The AI projects do not turn into signed customer contracts, or they need more capital than the company can raise.
Hosting remains a thin-margin business, and the customers are bitcoin miners whose demand depends on the bitcoin price.
The $123 million of preferred stock and its 9% dividend ranks ahead of the common shares in any wind-down.
The share price has been below $1. I found no Nasdaq deficiency notice, but a notice or a reverse split is possible.

Management execution

Management raised large amounts of equity and used part of it to repay $28.7 million of Generate Capital debt, which removes liens on the Dorothy assets.
It consolidated ownership of Dorothy 1A and 1B and bought the Briscoe wind farm, which simplifies the structure.
Gross profit fell from $1.9 million to $0.77 million between the first and second quarters, as revenue grew.
Announcements of partnerships and joint ventures are frequent, but contract terms, prices and capital costs are not disclosed. I give neutral credit until a first AI contract is signed.

Stock Analyza scorecard

Business quality	Score
Moat and pricing power	4/20
Economic return over cost of capital	1/20
Balance sheet and resilience	7/15
Earnings quality	2/15
Growth and runway	9/15
Management and capital allocation	4/10
Dilution and governance	0/5
Total	27/100

The valuation score is 17 of 100, in the highly overvalued band of 0 to 24.

Valuation score	Score
Discount to the weighted Base (-70.0%)	0/40
Protection against the Bear (-94.3%)	0/20
Agreement between methods (12.1% in the Base, wide in the Bear and Bull)	10/15
Historical valuation (no history collected, neutral)	5/10
Asymmetry of market expectations	1/10
Data and model penalty	1/5
Total	17/100

Business quality and valuation are shown separately and are not averaged.

Confidence score

Confidence	Score
Data and sources (cash today, asset values and AI economics missing)	2/5
Business predictability (no profit, financed by share sales)	1/5
Valuation robustness (value rests on option estimates)	1/5
Accounting transparency (large adjustments, minority interests)	2/5
Scenario dispersion ($0.04 to $0.81)	0/5
Total	6/25, grade D

The grade measures how well the model is identified, not the chance of a loss. A grade of D means that the analysis frames the questions and should not be used to size a position with confidence.

What I would watch from here

Green

A signed AI customer contract with a price, a term and a capital cost, for Dorothy 3 or Kati 2.
Hosting gross margin rising above 15% as capacity grows.
A quarter with no new share issuance and cash above $100 million.

Yellow

The third-quarter report, due in mid-November, shows the cash balance after the debt repayment and the share count.
The Dorothy 3 joint venture, expected to close by December 31, 2026, slips into 2027.
A Nasdaq notice about the price below $1.

Red

Large issuance under the equity line at prices below $0.50.
Bitcoin hosting customers reduce or cancel capacity.
Preferred dividends suspended or a reverse split announced.

The three most important thesis breakers

The AI projects fail to produce a signed contract in the next two quarters, which removes most of the value that the price assumes.
Further issuance at falling prices, which increases the share count faster than asset value.
A fall in bitcoin that reduces hosting demand and leaves the operating assets worth less than the $75 million I assume.

Stress test and independent check

I recomputed the values with a separate script and solved the reverse valuation for the pipeline value. That checks the arithmetic, not the forecasts. Most important inputs are my estimates, as the table shows.

Input	Status
Cash today ($100 million)	Estimate from June 30 cash, later raises and the repayment
Operating assets ($75 million)	Estimate; replacement cost not disclosed
AI pipeline ($60 million)	Estimate; no contract terms disclosed
Preferred stock ($123 million)	Reported shares and $25 liquidation preference
Common book value ($49.5 million)	Estimate; carrying value of the preferred stock assumed at $120 million
Share count (256 million)	246.7 million now plus an estimated 4%

The weakest point of the model is the value of the AI pipeline, which the company does not disclose and which is the whole difference between the Base and the price. The strongest bull argument is that scarce, power-backed sites are worth far more than I credit as AI demand grows, and that a first signed contract could move the value past $1. The strongest bear argument is that the common shares are a small slice behind $123 million of preferred stock, funded by dilution, and that the recent rally was a reaction to a partnership headline.

Final verdict: sell at $0.70

Soluna has real assets, a clean debt position and a story that fits where power and computing are going. At $0.70, though, the common shares are priced for AI contracts that do not yet exist, behind a preferred stock that takes the first $123 million of value.

Verdict: SELL at $0.70. Weighted Base $0.21, 70.0% below the price, cross-check $0.19, Confidence D (6/25). Required margin of safety 60%, buy range $0.08 to $0.09, conservative buy limit $0.08.

For an existing holder, the original cost of the shares is irrelevant. The three-day rally is a chance to exit at a price well above my Base, and anyone who keeps the shares should size the position for a total loss. A review is warranted when a signed AI contract with a price and capital cost is published, or when the third-quarter report shows the cash and share count.

Sources

Primary sources are Soluna's second quarter 2026 results release, the October 26, 2026 announcement of the Generate Capital repayment and the preliminary proxy statement.

The reference market price is $0.70 ($0.6989), the October 29, 2026 regular session close from a public price history, checked against a broker quote of $0.6889 on October 30. The share count of 246.7 million is from a public statistics page dated October 29, 2026. Balance sheet figures are as of June 30, 2026 unless stated.