What will the coming year look like for electric vehicle (EV) battery technology company QuantumScape (NYSE:QS)? It’s hard to know since QuantumScape tends to provide infrequent updates on its operational progress. Furthermore, the financial side of the equation isn’t great for QuantumScape. Therefore, it’s not a great idea to hold QS stock through 2024.
Besides, according to a prominent analyst’s estimate, it could be a long time — years, actually — before QuantumScape fully commercializes its EV battery cell technology. All in all, even if you’re bullish about the EV battery industry generally, there’s no need to put your capital on the chopping block with QuantumScape stock.
QS Stock Investors Shouldn’t Be Happy About This
If QuantumScape’s investors should demand anything, it’s regular updates on the company’s progress in developing its multi-layer EV battery cells. Yet, throughout 2023, QuantumScape’s press releases page provided few announcements for investors to get excited about.
On that page, QuantumScape’s final press release of the year came on Oct. 25. That one was about the company’s third-quarter business and financial results — but we’ll get to that in a moment, as QuantumScape’s financials aren’t ideal.
However, QuantumScape did mention that it had “raised $300M in gross proceeds from” a “public follow-on offering.” That might sound good, but it would have been nice to get an update a month or two later about how QuantumScape’s been spending that capital.
And of course, this $300 million isn’t just free money for QuantumScape without consequences. As QuantumScape enacted a share offering, this enabled the company to raise capital. Yet, printing and selling stock shares raises dilution concerns. It also raises trust issues, since QuantumScape might print and sell more shares if it needs to raise more money in the future.
An Analyst Firm’s Warning About QuantumScape
Lest we forget, QuantumScape admitted in a Form 10-Q filing, “As of September 30, 2023, the Company had not derived revenue from its principal business activities.” QuantumScape stock investors should always keep that statement in mind.
Unfortunately, QuantumScape failed to mention this in the company’s third-quarter shareholder letter. This is a textbook example of why investors should read Form 10-Q filings and not solely rely on a company’s shareholder letters for full disclosure. Again, I’m hinting at trust issues when it comes to QuantumScape.
Last, but certainly not least, I’d like to report on an analyst firm’s warning about QuantumScape. Specifically, William Blair analysts estimate that full commercialization for is QuantumScape is “a 2027 and beyond story.”
We’re just getting into 2024 now, and it could be a long and painful year for QS stock investors. Frankly, QuantumScape’s infrequent updates will make it difficult to hold the company’s shares with confidence through “2027 and beyond.”
QuantumScape Stock Is a No-Go in the New Year
You deserve to have the best EV industry stocks in your portfolio. Why would you choose to add so much uncertainty and risk to your holdings with QuantumScape stock?
That’s a tough question to answer, especially since QuantumScape lacks revenue and is unprofitable. If achieving full product commercialization won’t happen in the next several years, QuantumScape simply isn’t a high-confidence business to invest in now. Consequently, I can’t recommend QS stock even for a small, speculative share position in 2024.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
