QuantumScape (NYSE:QS) stock is falling lower after the solid-state battery (SSB) company announced a $300 million proposed underwritten public offering of Class A common stock. QuantumScape also plans on granting its underwriters a 30-day option to purchase up to $45 million of Class A stock at the public offering price, which was not immediately disclosed.
The company will use the proceeds toward working capital and other general purposes, such as “short and intermediate-term investment grade instruments, certificates of deposit or guaranteed obligations in accordance with our investment policy.”
QuantumScape also disclosed that, as of July 26, it had 382.55 million shares of Class A stock outstanding and 65.10 million shares of Class B stock outstanding. These two figures do not include Class A or B stock that can be exercised due to options, restricted stock units, or shares reserved for future issuance.
QS Stock: QuantumScape Announces $300 Million Public Offering
The public offering may come as a surprise to some, as QuantumScape stated in its second-quarter shareholder letter that it had $900 million in liquidity. The company added:
“We maintain our guidance that our cash runway is forecast to extend into the second half of 2025. Any funds raised from capital markets activity, including under our ATM prospectus supplement, would further extend this cash runway.”
QuantumScape’s use of proceeds toward short- and intermediate-term investment grade instruments is also interesting. The company may be capitalizing on high interest rates in government securities.
Still, shares of QS stock are falling due to the dilutive nature of the offering. In its “Risk Factors” section, QuantumScape warns that new investors in Class A common stock will experience immediate dilution because the public offering price will be higher than the company’s net tangible book value per share. In addition, the company added that it does not expect to pay cash dividends any time soon, while its shares may continue to experience “extreme volatility.”
During Q2, QuantumScape reported $0 in revenue, as expected. On the bright side, however, it announced that it was working with an automotive company to launch a ~5 Ah cell called QSE-5. This would be QuantumScape’s first commercial product.
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.
