As far as high-growth battery stocks are concerned, QuantumScape (NYSE:QS) remains one of the most-watched stocks right now. Ahead of the company’s upcoming earnings report on July 26, shares of QS stock are down significantly today, losing about 7% of their value in early afternoon trading.
Like other early-stage companies focused on solid-state battery technology, QuantumScape remains among the more speculative bets in the high-growth EV sector. This year, shares of QS stock have outperformed most. The stock’s year-to-date gains of approximately 75% (including today’s decline) are impressive. Indeed, investors appear to remain intrigued by companies with higher potential long-term upside, despite rising rates and valuation compression risk.
That said, today’s move indicates many investors remain cautious with respect to the company’s upcoming earnings report. While the company announced that it successfully completed testing of its 24-layer A0 prototype cells during its last earnings call, additional information on the timeline for profitability will be key. It’s not certain whether this company will be able to produce commercially viable batteries and generate revenue next year, as is the expectation.
With that said, let’s dive into what the market expects from QuantumScape next week.
QS Stock Dips Ahead of Key Earnings Report
Given QuantumScape is not yet producing revenue, it’s unsurprising to see analyst estimates for the company’s upcoming quarterly loss at around 22 cents per quarter. That said, this expected loss is wider than initially forecasted, suggesting that analysts believe greater up-front cash burn may be necessary to bring these batteries to market.
QuantumScape is expected to trim its losses from last quarter and provide some updates on its battery development timeline. The company appears to remain focused on improving its cathode capacity and efficiency of cell packaging. If these improvements can be made, and QuantumScape can show that it’s close to producing a viable battery, this is a stock that could carry significant speculative upside.
Now, the question remains just how much of this future upside is already priced in. Indeed, this is a stock that’s already gone on a tear this year. Some investors appear content to take profits ahead of this earnings report. For now, I think this stock is due for a volatile week. Therefore, some investors may find it difficult to hold onto QS stock. That said, for those looking to play big swings over the short-term, this will be a stock to keep on the watchlist.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
