QuantumScape (NYSE:QS) creates and markets innovative solid-state lithium metal batteries used in electric vehicles (EVs). The company aims to revolutionize energy storage to enable a sustainable future.

Protected by strong patents and driven by strong investment from market-leading entities, QS is one of the understated values in the battery manufacturing sector. Not only does QS have a strong balance sheet to support its research, production and marketing efforts, it is one of the industry leaders in the EV industry and is the closest to commercializing its technology. 

QS is an ideal investment for investors with a high risk tolerance, and this article reviews the company’s stock performance and outlines a rationale for a more benign outlook than its current share price suggests.

QS Is an Innovative Player in the Battery Space 

Transportation is responsible for 24% of carbon dioxide (CO2) emissions, according to the International Energy Agency. However, emissions increased by less than 0.5% in 2019, compared with 1.9% annually since 2000. Traditional EV batteries face a number of challenges, which are solved by QS solid-state lithium ion batteries. Relative to conventional lithium ion batteries, QS solid-state batteries improve safety, lower costs, reduce charging times and prolong battery life.

QS Stock Performance and Competitor Analysis

Being the first mover in an increasingly crowded sector, the QS first-mover advantage has allowed it to build a solid portfolio that restricts its competitors from using its technology, which is considered breakthrough by industry standards. For example, following a lawsuit, it forced battery maker Fisker Inc. (NYSE: FSR) to drop in solid-state batteries. In the last 52 weeks, the stock has ranged between $11.25 and $132.73. Between August and October, QS has been trading in a fairly narrow range of $20 to $24. On Sept. 23, it closed at $27.05, even as bullish signals appear to be short lived. 

While the stock was more bullish in 2021, it was also more volatile, and the 2 major spikes in January and March were followed by deep reversals. It has been trending downward since April, partly reflecting falling demand for vehicles and lockdowns that have disrupted transportation across the U.S. QS recovered to $26.82 on Sept. 27 after it announced a partnership that will drive its future growth.

Its competitor, Novanta Inc. (NASDAQ: NOVT) currently has higher revenues and better earnings than QS. Novanta has traded in a tight range over the last year, while QS has experienced a more protracted drop in its share price. NOVT ranged between $136.47 and $148.91, while QS has lost ground during this time. Spectrum Brands Holdings Inc. (NYSE: SPB), meanwhile, has risen by 19.24% to $97.86 between January and October. In the last month, the stock rose by 24.42%, while QS only rose by 3.39% between September and October. Nevertheless, long-term actions indicate that the QS will see strong price growth, supported by demand for EVs across North America, Asia and Europe.

QS Stock Forecast and Fundamental Analysis

Market for Solid-State Batteries Is Growing

The U.S. Department of Energy’s report finds that global energy storage is projected to grow exponentially by 2030. Most of this growth is expected to come from EVs, whose demand has held steady in the U.S. However, demand for EVs is rising exponentially in Europe and Asia and has been rising across Europe and Asia, as shown below.

Greater demand for EVs will support QS over the long run

R&D and Commercialization Supported by Strong Balance Sheet

For startups like QS, cash is an important driver of its success as it determines whether the company can continue to undertake costly research and development (R&D) activities to hone its technology, further develop its manufacturing capabilities and streamline its commercialization. Additionally, its cash and short-term investments grew by 89.93% in the 3rd quarter of 2021, slightly lower than the 94.87% showing in the 2nd quarter of 2021. QS needs 1 thing: loads of cash to help it identify and leverage new techniques that will ensure it keeps its market-leading position in the medium term.

Strong Business Model Will Drive Future Earnings

Solid-state battery technology is the most efficient technology for batteries, and it holds the key to expanding EVs to the mass market. Most EVs currently rely on lithium ion batteries that are exposed to runaway temperatures and limited driving range. Not only are QS batteries non-flammable, they charge faster and are safer. QS ended the 2nd quarter with more than $1.5 billion in liquidity and expects to enter 2022 with liquidity greater than $1.3 billion. As the company hopes to supply auto makers at scale in 2022, its balance sheet will enable it to fully fund customer prototype sampling and its manufacturing operations shown below.

QS Key Milestones

Source: Shareholder Q2 results, QS Investor relations.

QS Stock News

QS recently signed an agreement with a 2nd automotive equipment manufacturer. Growing partnerships and an innovative product will cause its share price to rise. The unnamed company will buy 10 megawatts of capacity for inclusion in pre-sale vehicles. Solid battery demand from Volkswagen Group (OTCMKTS: VWAGY) will support the production of more than 25 million EVs by 2030. VW is a top EV manufacturer in Europe and will create robust demand for QS.

How to Buy QuantumScape Stock

Buying QS is straightforward if you have an online brokerage account. Think of QS as a long-term investment as its price is currently not comparable to that of Spectrum or Novanta. 

Best Online Stock Brokers for QS Stock

Look no further if you want to buy QS. Below, Benzinga provides a table of brokerages that you can use to buy the stock, while keeping an eye out on your overall portfolio.

Watch out for QS

QS is not yet generating revenue, but it is a good stock for disciplined and long-term investors because of its patented and superior technology. Additionally its experienced management team and partnerships may boost its valuation and share price over the long haul. QS has a unique chance to change the EV battery landscape, and its strong balance sheet will fund both R&D and commercialization. Solid-state battery technology will definitely play a bigger role in the EV market going forward, and QS is a confident player in the battery manufacturing space.