Shares of QuantumScape (NYSE:QS) stock are up by about 14% after the solid-state battery (SSB) battery company filed its second-quarter earnings and shared its accompanying shareholder letter.
Short sellers of QS stock are definitely feeling the pressure today. As of July 15, there were 60 million shares sold short with a value of $591.60 million. That’s equivalent to a high short interest as a percentage of the float of 22.14%. Generally, a short interest of 10% is considered high, while a short interest of 20% or higher is considered very high.
At the same time, QuantumScape’s cost-to-borrow (CTB) fee has remained relatively subdued. The metric currently tallies in at just 3.99% and is defined as the annual fee that short sellers must pay to borrow stock. In fact, QuantumScape’s CTB fee has fallen every single day since July 14, based on data from Fintel. The CTB fee rises when short seller demand is high or rising and falls when it is low or declining.
QS Stock Surges on Second-Quarter Earnings
The falling CTB fee may signal that shorts were paring off their position prior to QuantumScape’s earnings report. Given the incline in QS stock today, this would have been appropriate in hindsight.
During Q2, QuantumScape reported revenue of $0, in line with the analyst estimate. On top of that, EPS came in at a loss of 26 cents, below the analyst estimate of a loss of 20 cents. QuantumScape reported an EPS loss of 22 cents a year ago. Meanwhile, research and development surged to $86.45 million, up from $65.13 million year-over-year.
Of course, shareholders in QS aren’t investing in the company for its present metrics. They believe that the company can ultimately create a viable SSB that will have automotive and electric vehicle (EV) companies lining up as customers. In its shareholder letter, QuantumScape revealed that it would name its first commercial product QSE-5, which will be a ~5 Ah cell.
“We are already working closely with a prospective launch customer in the automotive sector for this cell, with the goal of bringing our next-generation technology to the electric vehicle market as rapidly as possible,” said QuantumScape.
Following earnings, Truist Securities raised its QS price target to $8, while TD Cowen resumed coverage with a price target of $8.
On the date of publication, Eddie Pan did not hold (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.
