Soluna Holdings (NasdaqCM:SLNH) stock is back in focus after the company entered a definitive joint venture with Metrobloks to develop Project Kati 2, a multi phase data center build in Texas.

The latest joint venture news comes after a sharp 134.67% 90 day share price return and a 204.55% 1 year total shareholder return. However, the 30 day share price return of 20.72% indicates some recent momentum cooling.

If Soluna Holdings has put data center growth on your radar, it could be a good moment to see what else is moving across the AI infrastructure space through the 48 AI infrastructure stocks

With Soluna Holdings stock up sharply over the past year and trading well below a US$5.00 analyst price target, the key question now is whether current levels still undervalue Project Kati 2 or if the market is already pricing in future growth.

Preferred Price-to-Sales Multiple of 8.4x: Is It Justified?

Soluna Holdings stock has rallied hard over the past year, but on a pure revenue basis the valuation looks demanding compared with peers.

The key reference point here is the P/S ratio, which sits at 8.4x. This compares the company’s equity value of about $244.5m to its reported revenue of $33.2m, and gives a quick sense of how much investors are paying for each dollar of current sales in Soluna Holdings' data center and cryptocurrency mining focused business.

Two signals stand out for readers weighing that 8.4x figure. First, the company is currently loss making, with a net loss of $78.97m and a negative return on equity of 59.06%. In other words, the market is not paying for earnings at this stage but for the potential of its data center hosting and cryptocurrency mining operations. Second, shareholders have been substantially diluted in the past year, which means part of the recent share price strength has come alongside a rising share count rather than purely from fundamental profit improvement.

Compared with peers, the premium is clear. Soluna Holdings trades on a P/S of 8.4x against a peer average of 1.8x and a broader US Software industry average of 3.4x. This suggests the stock is valued at more than double the sector level on this metric. That kind of gap usually reflects very different expectations for future revenue quality or growth relative to the wider peer group, even though there is currently insufficient data to assess forward growth rates.

Result: Price-to-sales of 8.4x (OVERVALUED)

However, Soluna Holdings still faces risks around ongoing losses of $78.97m and past shareholder dilution, which could limit support if progress on Project Kati 2 disappoints.

Next Steps

If the mix of strong recent returns and rich P/S multiple around Soluna Holdings leaves you uncertain, take a moment to inspect the underlying numbers and context yourself. You can start with the company’s 3 important warning signs.

Looking for more ideas beyond Soluna Holdings?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.