Electric vehicle battery technology company QuantumScape (NYSE:QS) might seem like a promising startup in a potentially hyper-growth niche industry. However, financial traders should maintain low expectations for QS stock in 2023.
It’s a harsh reality to face, but QuantumScape’s financials aren’t ideal. Moreover, the company’s progress toward product commercialization is moving at a snail’s pace.
QuantumScape is chasing the Holy Grail of EV battery cell technology. For quite a while, QuantumScape’s shareholders have hoped that the company’s “forever battery” would be a game-changer in the vehicle electrification market.
As the old saying goes, however, hope isn’t a viable investment strategy. It feels like QuantumScape is taking forever to move its “forever battery” from concept to commercialization. In the meantime, QuantumScape’s loyal investors continue to deal with steep capital losses.
The Trend Isn’t Your Friend With QS Stock
In hindsight, it’s clear that QuantumScape was over-hyped in February of this year. Since then, QS stock has lost half of its value, and has slid toward the perilous $5 level. Below that, the stock could enter penny stock territory.
Clearly, QuantumScape’s innovative spirit hasn’t lifted traders’ spirits on Wall Street.
It’s been frustrating to continually check QuantumScape’s press releases page and see very few updates there. The clock keeps ticking. It’s been five months since the company shipped out its 24-layer prototype battery cells to automotive manufacturers.
For what it’s worth, QuantumScape released a shareholder letter on April 26. That letter did nothing to stop the downfall of QS stock, though. Even after all of this time has passed, QuantumScape still has “work to do to improve reliability” as the company transitions “from prototype to commercial product.”
They’ve provided no specific timeline on this transition, however.
QuantumScape’s Financials Are Getting Worse
QuantumScape seems to take its time in advancing its battery cell technology. This is problematic because the company’s capital position is diminishing. After all, it’s not cheap to operate an innovative business enterprise like QuantumScape.
QuantumScape has admitted that its planned “principal operations have not yet commenced” and that, as of March 31, the company “had not derived revenue from its principal business activities.”
The company has been spending money but not generating any sales. Notably, QuantumScape’s operating expenses grew from $90.657 million in 2022’s first quarter to $109.978 million in the first quarter of 2023.
During the same time frame, QuantumScape’s net earnings loss widened by nearly 16%, from $90.353 million to $104.631 million. Not only that, but the company’s capital position has been in a state of decline.
Alarmingly, QuantumScape’s cash, cash equivalents and restricted cash decreased from $300.535 million to $258.733 million.
QS Stock Isn’t Worth Your Time and Money
QuantumScape’s long-term investors have taken a lot of punishment. The company hasn’t given QuantumScape’s shareholders an operational road map with specific time frames.
Thus, QuantumScape is testing its stakeholders’ patience without delivering sufficient value to them. QS stock doesn’t deserve an “F” rating, as the company could alter the EV battery landscape at some point in the future.
However, the stock gets a “D” rating since many investors won’t want to wait an indefinite period of time for QuantumScape to finally achieve full commercialization.
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.