Why Is QuantumScape (QS) Stock Down Today?

  • QuantumScape (QS) stock is dropping again today after worse-than-expected earnings.
  • The battery maker's net loss widened while its adjusted EBITDA loss accelerated 68% year-over-year (YOY).
  • This earnings report highlights investor concerns around target date profitability, which may be further out than previously expected.
A hand holds a phone and the screen shows the QuantumScape logo
Source: rafapress / Shutterstock

Despite an otherwise broadly positive day for companies in the electric vehicle (EV), battery and renewables sector, QuantumScape (NYSE:QS) isn’t feeling the love. In fact, QS stock dropped more than 7% this morning before paring some of its losses. Now, the solid-state battery developer is down by about 1%. This move follows the company’s less-than-optimal second-quarter earnings release.

In short, QuantumScape missed on almost every metric in Q2. The company’s loss per share widened to 22 cents, missing estimates. Its adjusted EBITDA loss also surged approximately 68% year-over-year (YOY). And, given the fact that the company isn’t yet profitable, QuantumScape’s cash burn rate remains high (although in line with expectations).

These earnings (or lack thereof) compound other risks that investors have noted with QS stock, which is down dramatically over the past year. Let’s dive into what investors may want to take away from the results.

QS Stock Drops Again Following Earnings

Indeed, investors couldn’t seem to find a reason to hit the bid today. QuantumScape is still an early-stage battery player, looking to be the first to create a commercially viable solid-state battery. These batteries are much more efficient, leading investors to believe that — should QuantumScape get it right — this could be a massive market long-term.

However, the market isn’t providing the valuations it once was for long-dated risk assets. Accordingly, QS stock is down more than 90% from its all-time-high peak. Until the company can show some sort of predictable path to profitability, the market will likely continue to view QS as a risky bet.

Notably, short sellers have targeted QuantumScape in the past, for a variety of reasons. Thus far, they’ve been proven right. That said, given the amount of bearish sentiment around QS stock, I’ll be watching to see if short squeeze interest builds. After all, we’ve seen some interesting developments with short squeezes lately.

On the date of publication, Chris MacDonald did not hold (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 MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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