Watching QuantumScape (NYSE:QS) in 2021 was like watching a car wreck. Wall Street has continued to be less-than-impressed with the battery startup in 2022. But does that spell a stronger opportunity for bullish investors to charge into QS stock?
Let’s look at what’s happening off and on the QS price chart, then offer a risk-adjusted determination positioned to charge up the portfolios without the risk of becoming a crash test dummy.
Not that it’s alone. It isn’t. With stocks such as Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA) or a Home Depot (NYSE:HD) also among this year’s early casualties, shares of QS stock have plenty of exceptional company these days.
But let’s face it, the pain for QuantumScape’s shareholders has also been a much more durable cycle. It’s one which goes well beyond this year’s macro geopolitical, Covid-19 and interest rate fears, all of which have gripped Wall Street in 2022.
The fact of the matter is it’s been more than a year since QS stock peaked in late December 2020 at an all-time-high of $132.73.
And despite some brief head spinning price spikes along the way, today’s closing price of $16.37 and year-to-date decline of 26% speak to the devastatingly ugly ride for virtually all of QuantumScape’s bullish investors.
Comparatively, by and large shareholders in AMZN, TSLA, HD have nothing to complain about following record breaking highs and gains in 2021.
That’s not to say investors in QS stock aren’t without responsibility for their woes. They are. But in no uncertain terms, they’re also victims of circumstance.
From a bit of irrational exuberance to the almost inevitable payback for the bullish overreach, and a couple prolonged waves of more demanding restraint hitting growth stocks of QS’ caliber, the past thirteen months have seen the highs and lows of investor sentiment.
Moreover, unlike Amazon and other titans of industry, investor behavior, both bullish and bearish, has been the feature responsible for driving QS stock, rather than actual product, top and bottom-lines and that sort of thing.
Today, commercial success for QuantumScape’s solid state multi-layer battery, which has been heralded by some as a potential Holy Grail for EVs, remains at best, a couple years out. Worse, it may never make it out of the lab.
But if there’s room in investors’ portfolios for a pre-sales, concept-stage company, QS’ latest test results from late January confirming hundreds of 15-minute fast charging cycles for its battery technology, continues to support the path to commercialization.
QS Stock Weekly Price Chart
Source: Charts by TradingView
It’s not a secret some big investors are betting on QuantumScape’s success. Volkswagen (OTCMKTS:VWAGY) and Microsoft’s (NASDAQ:MSFT) Bill Gates remain deep-pocketed interests.
But what works or doesn’t work for those partnerships isn’t the same as you or me purchasing QS stock in the open market.
And sporting a $6.9 billion valuation at $16.37, don’t believe for a second QuantumScape has to go up after losing a staggering 87% in share price.
An eventual $0 price in QS is always a possibility for this type of investment. So is $132.73 and possibly new highs.
So are all those other potential QuantumScape outcomes in-between. And with a history of larger price volatility, an actively-managed collar in QS remains an attractive proposition for buyers.
Bottom-line, for investors that don’t swing recklessly from fences, appreciate the limitations of Bill or VW as allies or realize the shortcomings of a good-looking weekly price chart with an obvious long road ahead of it, a QS stock collar which allows for profitable adjustments to be made during the best and worst of times, just makes sense.
On the date of publication, Chris Tyler 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 Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
