Even if you have a bullish outlook on electric vehicle (EV) battery technology company QuantumScape (NYSE:QS), be careful. QS stock will be vulnerable over the coming days due to a major event that could turn QuantumScape’s optimistic investors into disappointed pessimists.
It may be the case that solid-state batteries, like the ones that QuantumScape is developing, have advantages. These batteries are touted as potentially being faster at charging as well as safer and less expensive.
That’s all fine and well, but it doesn’t necessarily mean QuantumScape stock is destined for higher prices. I hate to be the bearer of bad news, but an imminent event could show that QuantumScape’s challenges are persistent and problematic.
A Significant Event for QuantumScape
One thing about QuantumScape that frustrates me — and I’m sure I’m not the only one — is the company’s lack of frequent updates. QuantumScape’s press releases page is rarely updated, and the shareholders might have to wait weeks or even months for a meaningful announcement.
However, the expectation of providing quarterly financial results effectively forces QuantumScape to release an update every three months. Hence, these quarterly data releases are particularly impactful for QuantumScape and its long-term investors.
The problem is that QuantumScape is a pre-revenue company and, therefore, a negative-income business. Thus, until it reaches the commercialization stage for its products, quarterly financial reports shouldn’t be considered positive catalysts.
QS Stock’s Recent Post-Earnings Drops
QuantumScape, to put it bluntly, has a poor track record of earnings per share (misses versus beats. In other words, even though Wall Street typically expects QuantumScape to post negative earnings, the actual results have usually been more deeply negative than anticipated.)
So, mark your calendars for July 26. That’s when QuantumScape is set to release its second-quarter 2023 results. Before you take a position in QS stock, consider what happened after the previous two quarterly earnings events.
After the fourth-quarter 2022 earnings report on Feb. 14, QuantumScape stock popped for a hot minute but then tanked. Then, after the company’s first-quarter 2023 earnings release on April 25, the stock just dropped over the following days.
Now, we have a setup for imminent failure. QS stock already rallied in late June and the first half of July. If this means QuantumScape’s investors have high hopes, that’s a serious problem. QuantumScape would have to deliver outstanding quarterly results just to meet those expectations.
Sell QuantumScape Stock Before It’s Too Late
Who knows — maybe there will be a miracle this time around. QuantumScape might provide a definitive timeline for full commercialization of its products. Or, perhaps the company’s second-quarter financial results will be much better than anticipated.
However, while these are possibilities, they’re not likely to happen. QuantumScape stock already had a recent run-up, so it’s liable to fall after earnings.
So, watch out for QuantumScape’s upcoming earnings event. It could be a chance for the company to blow investors’ minds. The more probable outcome, however, is a drawdown for QS stock.
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.