QuantumScape (NYSE:QS) has been on a losing streak for weeks. After enjoying impressive growth in late 2020, the battery producer has been slowly losing ground. Even as electric vehicles (EVs) have boomed in 2022, QS stock has struggled to hold its own against severe macroeconomic headwinds.
Last week, QS stock finished Friday in the red as a dark cloud loomed over the EV sector. There are several factors that have helped push it down, mostly related to macroeconomic conditions. Several other EV stocks also fell alongside QuantumScape, raising some questions about the future of the industry. However, plenty of experts predict that QS sock will be among the sector’s biggest winners as markets recover.
Let’s take a closer look at the forces pushing QuantumScape down and what investors can expect moving forward.
What’s Happening With QS Stock?
This week isn’t off to a good start for QS stock. As of this writing, shares are down 4% for the day and current volatility suggests they have further to fall. Despite some slight growth in late November, the stock has been falling for most of December, currently down about 13% for the past one month. Many EV stocks have struggled this month, but market conditions have made it particularly difficult for QuantumScape to thrive.
Sometimes when a sector-leading stock starts to decline, it can pull its smaller peers down with it. Ever since Elon Musk turned his attention to Twitter, Tesla (NASDAQ:TSLA) has been declining steadily, falling more than 10% for the past one month. As it trends downward, investors are likely wondering what that means for the fate of the EV sector.
The short answer is not a lot, as some expect markets to come roaring back in 2023. Additionally, TSLA stock is falling because Elon Musk is making investors nervous by focusing on Twitter, not because of any factors impacting EV demand. The current declines in TSLA stock don’t say much about QuantumScape, although they are pulling the sector down temporarily.
It’s also worth noting that QuantumScape recently suffered a downgrade. Last week, Goldman Sachs decreased its QS stock price target and issued a “sell” rating. Goldman Sachs cited concerns regarding QuantumScape’s path toward profitability. Analyst Mark Delaney believes QS stock will struggle “in light of the tough macro conditions.”
These concerns are certainly valid. QuantumScape is still a pre-revenue company. While it’s work in solid-state batteries (SSBs) has significant potential, it remains unproven as a manufacturer. Additionally, in an economic environment marked by rising interest rates, investors typically gravitate toward stocks that they see as safer bets. The collective faltering of the EV sector isn’t helping. Combined with the recent downgrade, it’s clear that the deck is stacked against QS stock right now.
What Comes Next
Still, for all its volatility recently, many experts maintain that QS stock is destined for growth. InvestorPlace contributor Faizan Farooque rates it as a battery stock to buy for long-term gains, seeing it as having an edge over competitors. Fellow contributor Josh Enomoto sees QS rising even sooner, ranking it as top battery stock for 2023. Lastly, InvestorPlace’s Luke Lango has long maintained a bullish stance on shares, predicting 10x gains by 2030. If QuantumScape’s tech can manifest into the battery that experts predict, QS stock has a chance to soar.
On the date of publication, Samuel O’Brient 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.