Next-generation solid-state lithium-metal batteries for electric cars are being developed by QuantumScape (QS). The San Jose, California-based startup has said it is on a mission to revolutionize energy storage to create a sustainable future.
It is dealing with legal issues, and since coming public in November 2020, the stock price has seen very wild swings.
In addition to other variables influencing a QS to stock projection, we examine the company's potential and position in the rapidly evolving area of electric cars.
If you haven't been keeping up with advances in the area of electric vehicles over the last several years, you may not be acquainted with this business.
Founded in 2010, QuantumScape became publicly traded on November 25, 2020, after merging with Kensington Capital Acquisition, a business that specializes in acquisitions (SPAC).
According to the business, it has developed a technology that provides quick charging, durable, and safe batteries to power zero-emission vehicles.
Three main justifications given by QuantumScape for individuals to purchase its shares are as follows:
A once-in-a-century transition to electric cars is taking place, and solid-state batteries are essential to this transition.
QuantumScape provides the only lithium-metal solid-state battery with vehicle OEM approval.
It's safe to say that since the company's IPO in November 2020, QS stock has taken investors on a wild journey.
On December 24, 2020, it first skyrocketed 173 percent to $114.77, but it then started to drop steadily. The shares have dropped 83 percent to $19.61 by August 2021.
The stock increased from $23.61 in late July to $40.58 in mid-November during the previous six months. Since then, it has lost ground again, with a 56 percent decline bringing the price to $17.92 at the close on January 19, 2022.
According to technical analysis of the QS stock, a relative strength index (RSI) rating of 27.83 indicates the stock has moved into an oversold or undervalued zone.
newest outcomes
For the three months that ended on September 30, 2021, the firm reported total operating costs of $53.83 million. The $20.69m in prices reported for the same time in 2020 were more than doubled by this amount.
QuantumScape noted in the letter to shareholders that it anticipates 2021 cash operating expenditures to range between $130 million to $160 million.
With the help of our equipment suppliers, we now have a clearer picture of how we will end the year. We predict that CAPEX will be between $135 million and $165 million," it said.
The business reaffirmed its forecast for more than $1.3 billion in liquidity at year's end.
As we endeavor to commercialize our solid-state lithium-metal technology, this robust financial position allows us to spend resources effectively, the company's statement said.
legal difficulties
According to reports, stockholders who questioned the caliber of its batteries and the tests it used to gauge performance have started using the company.
According to documents, this lawsuit has been filed in the Northern District of California's United States District Court.
strategic outlook
Over the next ten years, the board of directors of QuantumScape has several goals to accomplish.
These included the combined delivery of one terawatt-worth hour of battery cells, equal to more than 20 gigafactory-sized facilities' yearly output outside Reno, Nevada.
The letter to shareholders stated, "While these goals are unquestionably enormous in scope, we believe that they are, in fact, achievable. Beyond 2030, our long-term goals are to increase our market share in the [electric vehicle] EV adoption market, which we predict will see multi-decade growth.
While it admitted that there was a lot of work to be done, it stressed that "exceptional opportunity needs tremendous ambition" and said it was committed to making aspirations a reality.
The business claimed that the once-in-a-generation switch to electric cars, coupled with QuantumScape's revolutionary lithium-metal battery technology, "represents an unprecedented potential for decarbonization as well as shareholder value development."
The International Energy Agency (IEA) estimates that there will be 10 million electric vehicles worldwide by the end of 2020, after a decade of strong development.
The IEA said that despite a pandemic-related worldwide decline in auto sales, which saw a 16 percent dip in global auto sales, "Electric vehicle registrations surged by 41 percent in 2020."
The report said the prospect for EV sales shortly was promising.
increasing sales of electric vehicles
Global sales of electric cars increased by around 140% in the first quarter of 2021 compared to the same time in 2020, according to the IEA. Around 500,000 vehicles were sold in China, and about 450,000 in Europe. US sales increased significantly compared to the first quarter of 2020, starting from a far lower level.
The survey also noted that current global policies predicted a strong increase over the next ten years, with the stock reaching 145 million in 2030 and accounting for 7% of the global fleet of roads.
The IEA said, "EV markets might be much bigger if governments step up efforts to meet climate objectives."
According to the Sustainable Development Scenario, the worldwide EV fleet will reach 230 million cars in 2030 (excluding two and three-wheelers), a stock share of 12 percent.
According to the five analyst opinions surveyed by MarketBeat, analysts expected the price to increase over the next 12 months, with a median price objective of $42.67. Predictions for the price of QuantumScape stock range from a low of $25 to a high of $57.
With one analyst recommending a buy and four recommending a hold, the stock has a consensus recommendation of hold.
JPMorgan increased its QuantumScape forecasts from $36 to $40 in November 2021, while Morgan Stanley maintained its equal weight rating. In 2021, Goldman Sachs began covering the QS stock with a $42 forecast and a neutral rating.
According to Wallet Investor's algorithmic predictions, the stock is a "poor long-term (one year) investment" and is expected to drop to $10.93 in that time. The website projected that the stock will start in 2023 at $8.898 before dropping sharply to $0.340.
The price is expected to continue declining in 2025, reaching the pitiful levels of $0.000001.
Please be aware that price forecasts might be inaccurate, and forecasts shouldn't be utilized in place of your independent research. Always do your research before investing. Furthermore, never trade or invest money you cannot afford to lose.
Views of analysts on quantum space
According to Danni Hewson, the financial analyst at AJ Bell, green technology and electric cars are right at the top of the list when it comes to growth sectors for 2022.
She told Capital.com that "consumers are quickly becoming convinced, and the large automakers are vying for position on the field, which has so far been dominated by the new child, Tesla."
Naturally, there will be concerns when a new region develops; some of them are already posing problems.
She said, "Ask anybody the largest barrier keeping them from switching from a combustion engine to an electric vehicle, and they'll likely reply price or range or both.
QuantumScape could be one of the businesses that significantly alters that discourse. - Danni Hewson, AJ Bell analyst
Hewson also emphasized that the company has been collaborating on creating the next generation of batteries to provide greater power for a smaller amount of weight with Volkswagen and "another unknown auto big boy."
If it works, it sounds quite exciting, she said. "Over the past year, the company's share price has been, to put it mildly, unpredictable, and a big part of that is because they haven't yet shown a prototype."
But those with greater faith might benefit from investors' hesitation to invest until they see something more concrete.
There is a possibility for improvement if the next few years go well, according to Hewson, who noted that shares were down a staggering 73 percent in 2021 and were still trading below their IPO price.
Its commercial manufacturing goal is 2024, and the current pricing will look absurd if it achieves that goal and outperforms its competitors.
Investing long-term with QS Stock
The fact is that QuantumScape probably won't begin operating at a commercial scale until the 2025 fiscal year. It's not news that. Making solid-state EV batteries is still the same long-term wager that it has always been.
So why should investors be concerned right now? Since there is a lengthy time horizon and no assurance that QuantumScape would be successful in creating such a battery, Well, for one thing, QuantumScape accomplished its developmental goals quite swiftly.
After thorough testing, the 10-layer cell retained at least 80% of its energy after 800 cycles. The company was sure that its technical expertise was superior to its rivals. We think no other player has exhibited equal performance with solid-state or lithium-metal battery technology, according to CEO Jagdeep Singh.
However, the market has turned against QS stock. It seems to sense given the length of time before any possible huge payout. There is a significant time between now and the anticipated commercialization in 2024–2025.
QuantumScape may not work. Other companies may launch solid-state EV batteries before the company does.
Skepticism Rules the Mind
This year, QuantumScape achieved its development objectives. It should theoretically trade higher as a result. But it seems like the market is just waiting for it to collapse. In November, the company declared that its 2021 objectives had been met earlier than expected.
A company that completes a strategy plan faster than expected can't be faulted for anything.
However, the market is only anticipating QuantumScape's demise. The strong short interest in QS stock—now sitting at 16.25 percent—evidences this. That is due to the idea that competition is increasing.
QuantumScape indeed has competition in the solid-state market. In December, Solid Power (NASDAQ: SLDP) became public. It is a SPAC, similar to QuantumScape, and will join the game well-funded for growth and development. More than $500 million in cash equivalents are shown on its balance sheet.
Toyota (NYSE: TM) is still a strong rival in this market, and it's not something to take lightly. Toyota has said that by 2025, it too will be manufacturing commercial solid-state batteries.
Static Apps Expand the Market
The company's entry into the stationary power industry is another development that might boost the price of QS stock shortly. According to the company, Fluence Energy and QuantumScape have partnered (NASDAQ: FLNC). The alliance aims to provide stationary power applications with solid-state battery technology.
Not that QuantumScape has abandoned EV applications in light of the news. Instead, it indicates that the company's entire addressable market potential has grown and increased future income sources.
Again, QS stock is still a long-term investment, and the market knows there will be competition before commercialization.
It seems a solid option for investors eager to profit from the niche. But another tactic may be to purchase numerous rivals in the market and gradually diminish the stakes.
But now that QS has partnered with Fluence Energy, I like the stock since it has more potential. In addition, QuantumScape impressed me since it achieved its strategic objectives earlier than expected.
Companies that build a plan, work diligently to complete their tasks, and deliver deserve praise. I now have more long-term faith in the shares as a result.
QS Stock Faces New Rivals
QuantumScape now has additional rivals in its fight to be the top producer of solid-state batteries, the Morgan Stanley analyst notes. At least two of these businesses are listed publicly.
As an example, SES AI, a firm, says that their hybrid lithium-metal batteries are simpler to build than QuantumScape's lithium-metal batteries. SES AI intends to reverse merge with a special purpose acquisition company to go public shortly (SPAC).
Ivanhoe Capital Acquisition Corp (NYSE: IVAN), the name of the SPAC, is now trading for $10.02 per share. According to its current PowerPoint presentation, 330 million outstanding shares will be outstanding.
That suggests that after the reverse merger is completed and the company begins trading on the NYSE, its pro forma market valuation will be $3.3 billion. This is similar to the $10 billion market value of QuantumScape as of December 14. The reverse merger is anticipated to occur shortly, at which point the transaction will begin trading under the ticker SES.
The firm is based in China and operates two pilot plants—one in Shanghai and the other in Boston. It does seem to be closer to making money than QuantumScape, however. According to projections on page 45 of its presentation, sales will start at $0.5 billion in 2025. Significant revenue, however, won't start until 2026, when there will be $3.2 billion.
QuantumScape, on the other hand, is predicted by experts to generate only $10 million in sales in 2024 and $34 million in 2025, and they anticipate just $237 million for 2026. If SES's lofty expectations come true, this is much below what it is expected to achieve.
Additional rival: Solid Power Now Public
Solid Power (NASDAQ: SLDP), which became public on December 9 through a SPAC reverse merger, is a second rival. Since 2019, Solid Power has operated a pilot plant.
According to their side deck presentation, SLDP, like QuantumScape, has had vehicle OEMs test its batteries, including BMW (OTCMKTS: BMWYY) and Ford (NYSE: F). According to page 39 of its PowerPoint deck, Solid Power has an estimated market valuation of $1.765 billion and 184 million shares outstanding.
In 2024, $10 million in income is anticipated, followed by $33 million in 2025, and $132 million in 2026, according to SLDP. Although, in the long run, experts anticipate QuantumScape will generate larger revenue by the decade's end, those figures start comparable to QuantumScape.
What This Means for QS Stock
Intriguingly, Solid Power has a market value of $1.76 billion, but QS stock has a market valuation of $10 billion. This suggests that QuantumScape may decline much more if it does not generate money more quickly than analysts now anticipate.
The SLDP stock may, however, be significantly undervalued. The two firms will probably converge in the center regarding value, although I think the former is more plausible. This suggests that QS stock is probably a good deal at the present price, particularly if it can start generating income sooner than anticipated.
Mark Hake had no holdings (direct or indirect) in any of the securities referenced in this article as of the date of publishing.
Real-time News
