Ceres Power Holdings (LSE:CWR), the solid oxide fuel cell (SOFC) technology company, has been the darling of the FTSE 250 since June 2025, with its share price rising more than four times. But things have cooled over the past month or so.
Today (1 July), its shares are changing hands for nearly half what they were at the start of June. What’s going on? More importantly, does this represent a golden opportunity to consider? Let’s take a closer look.
A bit of a roller coaster
It’s been an amazing year for those holding the stock.
When I first wrote about the group on 4 April, its shares were changing hands for 337p. I then left it a few weeks (1 June) before revisiting the investment case. At the time, its share price was 814p. Now, it’s around 450p. A year ago, I could have bought one of the group’s shares for 80p. It’s been an incredible journey.
Running out of cash
Some of the drop from its 52-week high of 873p, recorded in May, has resulted from the company’s decision to ask shareholders for an extra £103m. The placing price was 570p. It’s a reminder that losses have to be funded from somewhere.
During the year ended 31 December 2025 (FY25), the company reported an operating loss of £47.6m on revenue of £32.6m. A year earlier, the figures were £31.3m and £51.9m respectively.
The group said it needed the additional cash to “establish the right balance sheet to drive growth and enable selective investment to support partner scale-up”.
But in the absence of further information, the company appears to be going backwards. And I suspect many would argue that a market cap of nearly £1bn is excessive for a loss-making business that isn’t growing. This could explain the recent volatility in the group’s share price.
My view
However, I’m persuaded that SOFCs could play a major part in the transition to net zero and, more immediately, help solve the conundrum of how to give data centres the bucket loads of power that they require. If I’m right, I think the stock could take off.
The group’s entered into a number of agreements with some large customers – Centrica and Doosan are just two — that will see it licence its technology to third parties. In return, Ceres Power will receive a royalty. Significantly, it received the first of these in 2025. Admittedly, £110,000 isn’t much to write home about. But this could be the start of something very big.
The group already has a gross profit margin of 70%. With a large royalty income stream it could be even higher. This capital-light business model requires less investment in property, plant, and equipment, and ties up less cash in working capital.
I recently took advantage of the pullback in the group’s share price. But in my short time as a shareholder, I’ve seen how erratic the stock can be.
With an unproven path to profitability, it’s most definitely at the riskier end of the investment scale. However, over the long term, I think it could grow into something much bigger and highly profitable. Those of a risk-averse nature should probably look elsewhere. Others could consider the stock.
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James Beard owns shares in Ceres Power Holdings plc.
