QuantumScape (NYSE:QS) still looks overvalued and therefore, QS stock may still have further to fall. However, if you believe, as I do, that there’s room for more than one company in the solid-state battery sector, than you may want to keep the company on your watch list.
That’s a far cry from where I was when I wrote about QuantumScape in April, But there’s new information that is making me reconsider. The information I’m referring to is the company’s hiring of Celina Mikolajcak as vice president of manufacturing engineering.
Mikolajczak was senior manager, battery technologies for Tesla (NASDAQ:TSLA) and most recently was vice president of engineering and battery technology for Panasonic (OTCMKTS:PCRFY) of North America. She also was serving on QuantumScape’s Board of Directors.
In fairness, that may be why QS stock hasn’t moved since the hiring was announced in May. However, Mikolajczak taking a more active role in the company’s operations is significantly different than being a board member.
Changing the Narrative
Investing is a what have you done for me lately world. In that context, a hire like that of Mikolajczak is enough to say that QuantumScape may be getting ready to rewrite its current narrative. And that would be welcome.
QuantumScape is still embroiled in three separate lawsuits stemming from a Seeking Alpha article that questioned the company’s ability, or any company’s ability, to bring a solid-state battery to market. However, investors seem to have no such issue with Solid Power, a company that is coming public through the special purpose acquistion company (SPAC), Decarbonization Plus Acquisition III (NASDAQ:DCRC).
Supporters of Solid Power will point out that company is backed by Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). However, QuantumScape has the backing of Volkswagen (OTCMKTS:VWAGY) which has stated its intention to supplant Tesla as the world’s number one electric vehicle (EV) manufacturer by 2025.
Volkswagen certainly doesn’t need to have a solid-state battery solution to achieve that goal, but it certainly wouldn’t hurt. In any event, the company wouldn’t be wasting their time with QuantumScape if they felt there was little hope for a payoff.
Bringing Revenue Forward
The hiring of Mikolajczak also brought to mind a recent article by InvestorPlace contributor Mark Hake. In his article, Hake theorized that QS stock will struggle to climb unless it finds a way to bring revenue forward. Hake wrote:
My conclusion is that this solid-state battery company is nothing more than a research organization. Nothing about the company indicates that it intends to commercialize any of its technology over the next several years.
However, Hake offered several potential solutions for QuantumScape. One possible option would be for Volkswagen to acquire the company. That’s another reason why adding a name like Mikolajczak to the leadership team can help.
QS Stock Has a Lifeline
QuantumScape will remain a speculative stock until it shows investors that it can deliver revenue. With that in mind, I think it’s likely that QS stock will continue to drop in the short term. Here are a few reasons I believe that’s true.
First, the company will likely have no news to report until its earnings report in August. Second, many investors can’t avoid the shiny object. Speculators in the battery technology space will likely put money into the DCRC SPAC.
And third, 2024 is a long time to wait for revenue. I believe that QuantumScape is changing its strategy. But if it’s not, 2024 is the date when it projects production will commence.
However, the hiring of Mikolajczak may be an indication that the company is not sitting idle. But to flip around an investing axiom, this may be a case of holding on the rumor and buying on the news.
On the date of publication, Chris Markoch 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.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
