Why QuantumScape (QS) Stock Is Down 65% in 2022

  • Investors are growing impatient with the release of QuantumScape’s (QS) solid-state battery (SSB).
  • CEO Jagdeep Singh expects a release of the battery “by roughly the middle of the decade.”
  • QS stock has been hampered by unprofitability and wide capital expenditures.
A sign for QuantumScape (QS).
Source: Michael Vi / Shutterstock.com

Shares of QuantumScape (NYSE:QS) stock are down by about 65% year-to-date (YTD) as investors await the arrival of the company’s proprietary solid-state battery (SSB). 

QS stock debuted on the public markets in 2020 after undergoing a special purpose acquisition company (SPAC) merger. In December, the battery stock soared to more than $130 per share. That’s a far cry from the current price of about $8.

CEO Jagdeep Singh expects the release of a SSB “by roughly the middle of the decade.” Singh claims that QuantumScape’s battery will be able to provide an electric vehicle (EV) with 80% more range than a traditional lithium-ion battery and will last thousands of miles in many different temperatures. The CEO also says the solid-state battery will be able to recharge from 0% to 80% in just 15 minutes.

Why Is QS Stock Down 65% YTD?

That said, innovation is costly. QuantumScape reported a net loss of $94.83 million during the second quarter. For fiscal 2022, the company expects capital expenditures to be between $175 million and $225 million. By the end of the year, however, it also expects to deliver an A sample prototype cell to a customer.

An A sample is an experimental battery that is not full size. The B sample comes next, which is an improvement over the A sample that is built on a prototype assembly line with smaller and less sophisticated tools than a full-scale production battery. Finally, the C sample would be the final prototype made for full-scale assembly. Singh forecasts delivery of C samples by 2024 or 2025.

QuantumScape has six prospective automotive customers. This includes its largest shareholder, Volkswagen (OTCMKTS:VWAGY). Its remaining customers have not been disclosed.

Back in 2020, the company unveiled its first single-layer cell. Now this year, QuantumScape has successfully created and tested its first prototype 24-layer cells. This is a major milestone, as “24-layer cells represent A-sample candidates for some automotive OEMs.” In order to be acceptable, the 24-layer cells must be able to sustain the 800-cycle “test threshold,” which has not yet been completed.

Taking the SSB to market will require further expenses for QuantumScape — such as building a production facility — which may come in the form of equity dilution for QS stock investors. The company had $1.3 billion of cash on hand at the end of March. Singh believes this will be enough to deliver a C sample to a customer.

On the date of publication, Eddie Pan 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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/why-quantumscape-qs-stock-is-down-65-in-2022/.

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