It’s understandable if some investors are intrigued by QuantumScape (NYSE:QS) stock. The electric vehicle battery technology company’s forever battery seems promising, at least in theory.
Since QuantumScape is taking a while to move from idea to revenue, there’s significant risk that QS stock might lose value over the coming months.
Indeed, QuantumScape stock has already declined sharply since mid-February. Surely, the company’s investors are hungry for a game-changing update. Unfortunately, QuantumScape’s press releases page rarely provides updates that actually move the needle.
Even if you believe in the future of solid-state EV batteries, QuantumScape probably isn’t the right horse to bet on. Ultimately, traders don’t need to wait for QuantumScape to deliver.
| QS | QuantumScape | $6.36 |
Time Isn’t Your Friend With QS Stock
The passage of time might benefit option sellers and dividend stock investors. However, it definitely hasn’t worked in QS stock investors’ favor.
It’s been over five months since QuantumScape shipped its first 24-layer prototype battery cells to automotive manufacturers. That was exciting, but it’s moldy, old news by now.
The key question is: How much pain are you willing to tolerate? QuantumScape stock might stay above the $5 penny stock threshold for now. Unless there’s a significant news item from QuantumScape soon, however, the share price could easily fall below $5 and stay there.
Meanwhile, QuantumScape goes month after month without generating sales. The company fully admits that it “had not derived revenue from its principal business activities” as of March 31. Just as alarmingly, QuantumScape’s planned “principal operations have not yet commenced.”
QuantumScape Has a ‘Target’ but Not a Timeline
QuantumScape released a shareholder letter for 2023’s first quarter, but this didn’t prompt a moonshot in QS stock. Perhaps traders understood that, in some respects, QuantumScape’s shareholder was a “nothing burger.”
That might sound like a harsh assessment, but consider this. QuantumScape’s big announcement in its shareholder letter was that the company now has a target for its first commercial product. It will be a 24-layer cell with a capacity of approximately 5 amp-hours.
That’s fine, but when will this monumentally important product be released? QuantumScape provided no specific timeline for this.
There may be a timeline to financial destruction, however, hidden within QuantumScape’s shareholder letter. The cash-burn question is a burning question as revenue-less QuantumScape’s operating expenses grew from $90.657 million the first quarter of 2022 to $109.978 million in 2023’s first quarter.
QuantumScape Stock Isn’t a Must-Own in 2023
Investing in QuantumScape stock will require a great deal of patience and faith in the company. It’s hard to have faith in QuantumScape without more frequent, meaningful operational updates from the company.
In the final analysis, QuantumScape could have a potential gold mine with its “forever battery” concept. However, the risk-to-reward profile for QS stock doesn’t look favorable enough to justify a long position in 2023. So, feel free to search for other investments in the EV and related components space.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.