Should you buy QuantumScape while it’s under $9?

Should you buy QuantumScape while it’s under ?
Should you buy QuantumScape while it’s under ?

It’s been a tough backdrop for electric vehicles and related stocks. One stock that has had an up-and-down year is the battery maker. Quantum landscape (NASDAQ:QS). The company had a pretty solid year last year, making strides in its battery technology.

The stock hit $19 per share last October, but today it is 63% below its 52-week high. With shares trading below $9 per share, is QuantumScape stock a buy? Let’s delve into the business and its progress to find out.

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Last year was a productive one for QuantumScape, as the company made significant advances in its battery technology. One of its main achievements was the integration of what it calls the Cobra separator process into base cell production in the second quarter. This manufacturing process achieved a 25-fold improvement in heat treatment speed (compared to its previous Raptor process) and requires significantly less space, bringing it one step closer to mass production of its batteries.

In the third quarter, the company began shipping QSE-5 B1 cell samples to automotive customers, which have separators produced using its Cobra process. This cell demonstrated an energy density of 844 Wh/L and 301 Wh/kg, meaning its battery is smaller and lighter than current technology. Additionally, it can fast charge from 10% to 80% in less than 15 minutes, solving one of the main disadvantages of electric vehicles.

Image source: Getty Images.

The company also expanded its collaboration with PowerCo, which is volkswagenThe battery arm. As part of this, there is a non-exclusive license to mass produce battery cells of up to 40 GWh per year, expandable to 80 GWh per year. It also signed a joint development agreement with Murata Manufacturing and Corning produce ceramic separators in high volume for their solid state batteries. These companies help QuantumScape build its global supplier ecosystem as it prepares to produce batteries at scale.

This year, QuantumScape will begin field testing of its QSE-B1 sample cells in vehicles, as part of a launch program to demonstrate the technology’s capabilities in real-world automotive applications. For the full year, the company expects its adjusted EBITDA loss to be between $250 million and $275 million.

Looking ahead, it aims to have a series production car in partnership with Volkswagen and PowerCo, bringing its technology to the roads by 2029. In the meantime, the company will need to continue testing and expanding its manufacturing capabilities and building its supply chains.

Management believes its cash runway will extend over the second half of the decade, suggesting it could operate for years to come without raising capital. This is important for investors because capital increases can have a very dilutive effect. That said, the company is still a couple of years away from generating significant revenue. In the meantime, it remains highly speculative and story-driven, and most investors are best off avoiding the stock for now.

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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.

Should you buy QuantumScape while it’s under $9? was originally published by The Motley Fool

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