After A Run-Up, Quantumscape's Stock Is Tumbling

QuantumScape stock surged on Wednesday ahead of a narrower-than-expected fourth-quarter loss. In the early hours of Thursday, shares are plummeting.

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Furthermore, the drop is happening even though earnings don't matter to the electric-vehicle battery startup. QuantumScape (ticker: QS) has no sales yet. It's best for investors to focus on the company's goals for 2023 if they can stomach wild trading.

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QuantumScape lost 25 cents a share in the fourth quarter, compared to Wall Street expectations of 29 cents.

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Shares of the company are down about 10% in Thursday morning trading at $10.60, while the S&P 500SPX -0.75% and Nasdaq CompositeCOMP -0.72%  are down 0.9% and 1.2%, respectively. The fact that shares fell even after better numbers might come as a surprise, but during regular trading hours on Wednesday, shares gained 32%.

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Nobody knows why the stock rose 32% on Wednesday. Investors who bet on price declines heading into the earnings report may have covered their shorts. Stocks related to EVs did well on Wednesday after the White House announced more funding for EV-charging infrastructure. A 2.4% gain was recorded by Tesla TSLA +0.42% (TSLA) on Wednesday. EVgo EVGO -0.73% (EVGO) and ChargePoint Holdings (CHPT) saw their shares rise 8.6% and 10%, respectively.

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QuantumScape is seeking to be part of the EV supply chain. EV batteries with solid-state lithium anodes are under development by the company. A solid electrolyte, a component of a battery that facilitates the flow of electric charges, is referred to as solid-state in this case. There is a liquid electrolyte in use today.

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The solid-state battery holds the promise of lower costs, improved safety, faster charging, and longer EV ranges. However, the technology is still in its infancy and not ready for harsh environments like those in the automotive industry.

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It is expected that QuantumScape will generate significant sales in 2026, about $300 million. EV platforms will be just starting to experiment with solid-state batteries at that point.

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In its earnings report, management listed a number of goals for 2023, including increasing cathode-capacity loading, improving cell-pack efficiency, and implementing faster component-manufacturing technology.

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QuantumScape anticipates spending about $125 million on capital in 2023, and $250 million on operating expenses. A total of $375 million is far less than the more than $1 billion in cash and securities the company ended 2022 with.

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Since the start of the year, QuantumScape stock has gained almost 110%. Although shares have fallen more than 30% over the past year, they are still down 91% from their December 2020 record high of $132.73.

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Recently, QuantumScape shareholders and traders have experienced a wild ride.

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