How long must investors wait for electric vehicle battery technology company QuantumScape (NYSE:QS) to provide meaningful updates and achieve profitability? As QS stock continues to chop around, don’t be surprised if financial traders abandon it in search of more productive assets.
Not long ago, Wolfe Research analyst Rod Lache took issue with QuantumScape’s “long path to commercialization, as well as the speculative nature of its battery technology breakthroughs.”
That’s a valid complaint, as financial traders don’t have infinite reserves of time and patience. Even if you’re bullish on the concept of a “forever battery,” we’re not prepared to recommend investing in QuantumScape now.
Don’t Get Trapped When QS Stock Pops
One of the most treacherous aspects of investing is that stocks can sometimes pop during a long-term downtrend. This phenomenon can cause inexperienced traders to get trapped into a head-fake.
QS stock is notorious for doing this. It jumped from around $6 to $8 during the first half of June, only to trap the price chasers and fall back down.
Most likely, the pop was precipitated by traders anticipating that the Federal Reserve would pause its series of interest-rate hikes. It certainly wasn’t prompted by anything spectacular from QuantumScape. Day after day, QuantumScape’s press releases page offered another nothing sandwich; no announcements whatever.
QuantumScape Spends, and the Waiting Never Ends
And so, the shareholders were left to read and re-read QuantumScape’s shareholder letter from April and investor presentation from May.
Meanwhile, QuantumScape isn’t the only company that’s developing its own solid-state batteries in 2023. Thus, just because QuantumScape is willing to play the waiting game, this won’t stop the company’s competitors from moving forward.
However, even while QuantumScape isn’t frequently updating its shareholders, the company is proudly spending money. According to the company’s investor presentation, QuantumScape has spent over $500 million “on development to date.”
That’s not something to brag about, really, unless the result is a product that’s been commercialized and is providing revenue. Yet, QuantumScape’s first-quarter 2023 shareholder letter doesn’t mention any product sales or revenue. Therefore, there are no profits to speak of.
What we noticed, however, is that QuantumScape increased its operating expenses on a year-over-year basis in Q1 2023. Ultimately, before QuantumScape realizes its “forever battery” concept, the company could run out of capital as its net earnings loss widens. That would be a shame, as some shareholders have stood by QuantumScape month after month, hoping for the best but actually getting less.
You Can Do Better Than QS Stock
QuantumScape should be one of the most exciting companies in the vehicle electrification space. Unfortunately, QuantumScape’s updates are few and far between. So, this once-promising startup business is much less interesting than it ought to be.
It’s fine to monitor QuantumScape for developments. Just don’t get trapped if there are no updates but QS stock still head-fakes to the upside.
You could easily end up on the wrong side of the trade in that scenario, so be careful. In the final analysis, there’s no pressing need to invest in QuantumScape now. We encourage you to look for better opportunities in the EV-components space and elsewhere.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
