In late 2020, solid-state electric-vehicle (EV) battery maker QuantumScape (NYSE:QS) was a darling of the markets. As practically every EV-related stock shot to the moon, QS stock holders booked multi-bagger gains on their well-timed investment.
That was then, however, and this is now. The time of EV-market euphoria appears to be in the rear-view mirror, and viable businesses in 2022 must expand their horizons or be left behind.
So, is QuantumScape prepared to address rapidly changing market conditions? The price action of QS stock says no, but recent company-specific developments may suggest otherwise.
This presents a rare opportunity, as the share price is low even while QuantumScape’s ambitions run high. Before you charge up your portfolio and buy the stock, though, let’s indulge in some brief but crucial technical analysis.
A Closer Look at QS Stock
In mid-December of last year, I encouraged people to think about decades, not days, when it comes to QS stock.
At that time, the stock was trading at around $23 after already having declined from a peak of more than $130. Recently, the QuantumScape share price has declined even more.
Therefore, I still encourage loyal investors to think about the long-term prospects rather than obsess over month-to-month price moves.
Still, it’s worth noting that QS stock broke below the $20 level. The point here isn’t to scare anybody away, but only to draw attention to what may be a prime buying opportunity.
$20 was a support level throughout much of 2021. It might provide some resistance in 2022, so keep your eye on that price point and watch for a breakout, if it happens.
It’s interesting to witness QS stock falling to new short-term lows, even while the company seems to be doing relatively well.
For example, consider QuantumScape’s financials. During the nine months that ended on Sept. 30, 2020, the company incurred a net earnings loss of $405,178,000.
Now, let’s fast-forward to the nine months that ended on Sept. 30, 2021. In that period, QuantumScape swung from the aforementioned staggering loss, to a net profit of $21,250,000.
It feels as if Wall Street isn’t giving QuantumScape credit for that achievement. Furthermore, in a Form 8-K filing, the company made a disclosure that’s mysterious but also encouraging.
Apparently, QuantumScape “signed an agreement with an
established global luxury automotive original equipment manufacturer.”
Together, the two businesses hope to “collaborate on the validation and testing of Company’s solid-state battery cells with the goal of providing such cells to the OEM [original equipment manufacturer] for inclusion into pre-production prototype vehicles and ultimately supplying commercial versions of the cells for the OEM’s serial production vehicles.”
Expanding the Scope
Potentially collaborating with a global luxury automaker is certainly a major news item for QuantumScape. Yet, there may be something even more eventful on the horizon.
In a fresh press release, QuantumScape revealed a multi-year agreement with Fluence Energy (NASDAQ:FLNC) to introduce solid-state lithium-metal battery technology to stationary energy storage applications.
This represents more than just a collaboration with Fluence Energy. Really, it’s a major expansion of QuantumScape’s business scope.
It’s also a chance for QuantumScape to address a rapidly growing market. As the press release points out, stationary energy storage installations are expected to increase by over 2,000% from 2020 to 2030. Moreover, this represents a $385 billion global market opportunity.
In other words, as another author concisely summed it up, QuantumScape is moving beyond electric vehicles. This is a significant move for the company, and possibly for the clean-energy industry in general.
The Bottom Line
Applying QuantumScape’s technology to stationary clean-energy systems could be the catalyst needed to push QS stock higher.
Or, it could be an unmitigated disaster. Only time will tell, really.
Still, it’s encouraging to see QuantumScape extend the scope of its business interests. Hopefully, the result will be a brighter and more sustainable future for the company and its shareholders.
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.