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Think About Decades, Not Days, with QuantumScape

Suffice it to say that it hasn’t been an easy year for investors in solid-state electric-vehicle (EV) battery maker QuantumScape (NYSE:QS). There has been little in the way of comfort or consolation as QS stock, the former high flyer, fell out of favor on Wall Street.

A sign for QuantumScape (QS).
Source: Michael Vi / Shutterstock.com

I must admit, I was surprised to see the U.S. infrastructure bill get passed but the QuantumScape share price remained stagnant. After all, the bill allocates vast sums of money towards America’s electric vehicle (EV) industry.

Nevertheless, QS stock investors just can’t seem to get a break lately. Any infra-bill surge in November was quickly and frustratingly deflated in December.

Yet, bona fide contrarians should perk up at the thought of owning a piece of an unduly beaten-down EV battery maker in 2022. As we’ll discover, QuantumScape isn’t the unprofitable upstart the ever-present skeptics might assume it is.

A Closer Look at QS Stock

For some folks, it would be great to rewind the clock and go back to late 2020. During that time, the QuantumScape share price soared from $12 to $132.73 in less than two months.

However, we can’t turn back time and there’s no denying that QS stock wasn’t destined to stay above $100. Optimism morphed into volatility in 2021 as the share price tumbled to $30 in May and $20 in August.

The infrastructure bill pop-and-drop occurred in November and December, leaving traders elated and investors in the dumps.

By mid-December, the stock was trading near $23 and going nowhere fast. As the dust clears, all that’s left are QuantumScape’s true believers — and that’s why contrarian investors should consider picking up the pieces with a long position.

Waiting for an Update

So, what brought QS stock down in December? After the infra-bill optimism faded, QuantumScape’s investors didn’t really have much motivation to stay in the trade. The company’s most recent operational update was released on Nov. 16. It was a good one, I’ll admit.

In that update, QuantumScape revealed some encouraging testing data regarding the company’s highly anticipated 10-layer battery cell.

“We are delighted to share this data on 10-layer cell performance,” QuantumScape co-founder and CEO Jagdeep Singh was quoted as saying.

Reportedly, the data showed 800 cycles at better than one-hour charge rates at 25 degrees Celsius, with energy retention greater than 80%.

With that, QuantumScape achieved the objective that it had laid out for 2021 — a meaningful accomplishment in mid-November, no doubt. Since then, when it comes to significant operational updates from the company, it’s just been radio silence.

Swinging to Profitability

We can only hope that there’s something huge going on behind the scenes at QuantumScape, which will be revealed soon.

While we’re waiting, it will be useful to check on QuantumScape’s financials. The doubters and naysayers will probably assume that the company is in a deep hole.

However, it’s not usually a good idea to make assumptions. Instead, informed investors should get into the habit of frequently fact-checking with Securities and Exchange Commission (SEC) forms.

The data contained in QuantumScape’s most recently issued 10-Q form might surprise the company’s critics. During 2020’s first three quarters, QuantumScape posted a net earnings loss of $375.9 million. That’s a tough pill for investors to swallow.

Fast-forward to the first three quarters of 2021, and we can observe QuantumScape actually swinging to profitability.

To be more specific, the company achieve a net earnings gain of $15.35 million during that time. It’s not a huge amount, but hey, it’s green instead of red.

The Bottom Line

If the passage of the U.S. infrastructure bill couldn’t bring QS stock to life, what will? That’s a valid question. What we really need is a fresh operational update from the company — and patience from the shareholders, as QuantumScape is meant to be a long-term investment.

At least we can take note of QuantumScape’s improving bottom-line results. Perhaps this can tide the stakeholders over until the next update is issued – hopefully sooner, rather than later.

On the date of publication, David Moadel 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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 

Article printed from InvestorPlace Media, https://investorplace.com/2021/12/think-in-terms-of-decades-not-days-with-qs-stock/.

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