QuantumScape (NYSE:QS), which is trying to design and build a solid-state battery for electric vehicles (EVs), has received a price target increase from Truist, sending shares on the move in response. Analyst Jordan Levy maintains a hold rating on QS stock but now expects it to be worth $7 per share a year from now, up from $6.
QuantumScape stock jumped 10% on Nov. 29 and another 2% overnight. Shares opened Nov. 30 at $6.42 per share and a market capitalization of around $3 billion.
QS Stock: QuantumScape and the Holy Grail
A solid state battery with high energy density is the “Holy Grail” of today’s electric vehicle (EV) industry. Lithium ion batteries are liquid, more volatile and can even catch fire. This limits the range and safety of today’s EVs.
QuantumScape is working on lithium metal designs that can evolve to have double the energy density of the best models. Expert Sandy Munro said such a battery would be the “kiss of death” for gas-powered cars.
After 13 years of work, QuantumScape said this past spring that it was close to production. But in a letter to shareholders, CEO Jagdeep Singh noted that improvements must be made before the company can deliver a commercial product.
When interest rates were near zero, QuantumScape was a popular speculation. Shares crossed over $100 in late 2020. As interest rates rose, however, speculation waned. Shares are down 14% for the past one year, despite a July run-up to over $13 as the company prepared its second-quarter report. QS stock still runs hot with every corporate announcement.
I have written that, given increased competition, investors should know by Christmas whether the company has a chance. Christmas is coming soon.
What Happens Next?
QuantumScape listed $1.1 billion in cash and marketable securities in its third-quarter report. It had an operating cash loss of $110 million but sold $288 million in new QS stock.
There is still hope in its San Jose headquarters.
On the date of publication, Dana Blankenhorn 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.