QuantumScape (NYSE:QS) shares have been holding steady at around $7 per share since the start of the month, but as I recently argued, another near-term selloff for QS stock remains very possible.
Why? A recent bearish sell-side rating, for one. There has also been growing awareness of insider selling by members of the EV battery technology company’s C-Suite.
Other factors, like possible tax loss harvesting, could also put pressure on shares between now and year’s end. That said, when it comes to the company’s prospects in 2024, the future has yet to be written.
Although long standing concerns persist, the coming year (a pivotal one for QuantumScape) may bring with it major changes that leave skeptics of the stock (such as myself) compelled to reassess our view of this speculative growth play.
With this, let’s dive in and see what may be the best approach with QS going forward.
QS Stock: Still a Chancy Wager, But Not Necessarily ‘Doomed’
Don’t get me wrong. I have not fully changed my tune on QuantumScape. This stock remains a very chancy wager. Mostly, due to the numerous issues I’ve cited in prior coverage, such as the risk of continued shareholder dilution.
As I discussed previously, barring a pivot on interest rates by the Federal Reserve, the market’s appetite for stocks valued on future potential rather than present results will keep waning. This too could keep QS stock sliding lower.
Plus, while QS continues to make incremental progress developing and fine-tuning its solid state battery technology, it’s likely going to take “big news” like a move to the production stage or the announcement of a licensing deal to get shares back on an upward trajectory.
With management previously targeting 2025 or 2026 as when QuantumScape will enter production, I wouldn’t expect a fast move to this stage over the next year. However, a change in investor sentiment at a macro level or a surprise update from the company could send QS stock surging again.
A New Approach May Be the Key
Much like how Big Tech companies responded to Wall Street’s whims last year by implementing massive layoffs and other cost-saving measures, QS’s management could decide to change up its game plan. This may be all it takes for the stock to come back in the market’s good graces.
QuantumScape keeps developing its own manufacturing processes. However, the company has also hinted at exploring licensing opportunities to commercialize this technology. In 2024, the company may do more than just hint at going with this approach.
If QuantumScape next year inks another deal with either its strategic partner, Volkswagen (OTCMKTS:VWAGY), which is already participating in testing for QS, or with another automaker, such a move could help to bring some of the past hope and hype back into QS.
The Best Approach
On one hand, a big breakthrough in 2024 with QuantumScape’s R&D efforts is questionable. On the other hand, the pursuit of an alternative means to fund and grow the company may be the sort of big news that leads to a correspondingly large rebound for shares.
So, as there is an identifiable path for QS to not only maintain its premium valuation to other EV battery startups, but experience a surge as well, does that mean buy now? Not quite.
But the new year holds potential for new opportunities and a new era for the stock market.
Hence, even if you’re confident that QuantumScape will make big changes to drive big gains, wait for weakness. There’s no rush to buy.
On the date of publication, Thomas Niel 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.
