QuantumScape Stock Is Jumping After Earnings. Why the Move Is Meaningless.
Stock in electric vehicle battery technology company
is soaring after the company reported second-quarter earnings Tuesday evening. There was good news, but isn’t a really good reason for a double-digit jump. The stock is just very volatile.
The company reported a 12 cent per share loss, but earnings don’t matter all that much. There are no sales. More important the first 10-layer cells are being tested. QuantumScape is still a long way from commercial sales. The company is pioneering solid-state, lithium anode batteries. Solid-state, in this case, means no liquid in the batteries facilitating the movement of electrons. QuantumScape’s technology promises better EV range and safety along with faster charge times and lower costs.
Still, Quantum (ticker: QS) stock is up 8.6% in early trading at $23.25. Shares traded as high $24.38, up 13.9%. The S&P 500 and Dow Jones Industrial Average, for comparison, are up 0.1% and flat, respectively.
A QuantumScape battery looks like a playing card. A big challenge for the company is to turn one card into a deck of cards. That’s what will be required to build automotive-grade cells. Down the road, many decks will form the basis for an EV battery back.
“Our goal was to have 10-layer cells by the end of 2021, so we are encouraged to have our first 10-layer cells this early,” said CEO Jagdeep Singh on the company’s earnings conference call. The company tested a 4-layer cell in February. “The development of 10-layer cells has been the result of a number of concrete improvements to our separator manufacturing process.”
Faster development is a positive for the company and the stock. Still, options markets implied a 16% move, up or down, after earnings. Some of the Wednesday bounce is just due to the fact QuantumScape shares are very volatile.
The stock actually dropped 7.4% after reporting first-quarter earnings. That was the report where the company reported testing its 4-layer cell.
Since the company is still years from commercialization, investors will probably have to live with higher than average volatility. QuantumScape stock is down more than 80% from its $132.73 52-week high and up more than 140% from its $9.74 52-week low.
Shares are down about 72% year to date.
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