Make no mistake: QuantumScape (NYSE:QS) wants to be a game-changer in the electric vehicle (EV) battery market. Early-stage disruptive businesses are speculative, and QS stock has already impoverished some investors. Yet, if you’re willing to accept the risks involved, you might have a multi-year multi-bagger on your hands if you invest in QuantumScape today.
QuantumScape’s time as a darling of the financial market was brief but spectacular. Now, there’s no shortage of skepticism surrounding QuantumScape. The story of this intriguing solid-state lithium battery developer isn’t over yet, though.
Ask yourself: Can I handle extreme share-price volatility over the next five years? And, do I have an unshakable belief in QuantumScape’s battery technology? If so, then you’re invited to consider a small but confident share position in QuantumScape.
Financial Fitness Won’t Drive QS Stock Higher Anytime Soon
If you tend to think like an accountant or a bookkeeper, you might bristle at QuantumScape’s financials. To be fair and balanced, we must present the full picture of the company, and there are some bothersome fiscal stats to take note of.
QuantumScape’s most recently released quarterly financial results covered the third quarter of 2022. Year over year, the company’s research and development expenses doubled and so did QuantumScape’s general and administrative expenses.
Also during that timeframe, QuantumScape’s loss from operations more than doubled. Furthermore, the company reported a $117.65 million net earnings loss for Q3 2022.
But then, these figures shouldn’t be too surprising, as QuantumScape is what you might call a “pre-revenue” company. Or, as QuantumScape put it, the company “had not derived revenue from its principal business activities” as of Sept. 30, 2022.
QuantumScape’s Future Growth Will Depend on Operational Updates
Clearly, QuantumScape is still stuck in the early stages wherein a potentially transformative business has to spend a lot of money now, in order to possibly earn a lot more money later on. Again, it should be emphasized that QS stock is highly risky and only meant for a small share position.
On the other hand, as InvestorPlace contributor huge investors” like Bill Gates and Volkswagen (OTCMKTS:VWAGY). Apparently, those investors are willing to forgive
That future could happen within five years if governments around the world continue to support clean-energy initiatives. New-energy vehicles will need efficient and powerful batteries, and QuantumScape appears to be on the leading edge in developing this technology.
A month ago, QuantumScape announced that it started shipping 24-layer prototype samples of its battery cells to automotive manufacturers. QuantumScape CEO Jagdeep Singh called this event a “milestone,” and rightly so.
What investors undoubtedly want to see is more “milestone” moments like this. Any new operational updates could send QS stock much higher, so stay tuned as QuantumScape should hopefully have some surprises in store.
So, Where Will QuantumScape Be in 5 Years?
The QuantumScape share price reached $100 in 2021, but that was based on hype more than on operational updates. In hindsight, it’s easy to see why that share-price rally wasn’t meant to last.
Hopefully, QuantumScape can contain its spending but also share its developmental milestones with the public on a regular basis. There’s no guarantee that this will happen, of course.
If it does, however, then QS stock should revisit $100 in five years. With that target in mind, investors can choose to take a cautiously optimistic share position in QuantumScape.
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.