QuantumScape (NYSE: QS) shares are sinking today. The stock of the electric vehicle (EV) battery technology company was down by 9.2% as of 11 a.m. ET. But that comes after shares rocketed as much as 50% higher yesterday before closing the session up 43%.
There was good reason for the stock’s surge yesterday. So investors should wonder whether today’s drop is providing a compelling opportunity.
EV game changer
QuantumScape’s technology could have a major impact on the EV industry. Traditional lithium-ion batteries used for EVs use graphite anodes. That technology has limitations on vehicle range due to a low energy density. That also results in batteries losing charging capacity over time. QuantumScape has worked to replace the graphite with anode-free lithium metal. That would provide the highest energy density for EV batteries and go a long way toward addressing consumer hesitancy related to range anxiety.
Yesterday, a unit of Volkswagen Group that has been testing QuantumScape’s battery cells for the global automaker reported it achieved more than 1,000 charging cycles while maintaining over 95% of charging capacity. That means a typical EV would be able to drive for more than 300,000 miles without the battery losing its charging capacity and needing replacement. QuantumScape’s solid-state batteries would also charge faster and have less fire risk.
More work to do
Frank Blome, CEO of Volkswagen unit PowerCo, called the results encouraging. He added, “We are convinced of the solid-state cell and are continuing to work at full speed with our partner QuantumScape toward series production.”
These were early-stage laboratory tests, though. So there is still much work to do for commercialization of the technology. QuantumScape doesn’t expect to be in a position to go to market with its batteries for at least two more years.
That helps explain why some investors are selling the stock today after yesterday’s massive jump. But for investors thinking about the long term, and realizing this would still be a highly speculative investment, today’s drop could be a time to buy into QuantumScape’s potentially game-changing technology.
Should you invest $1,000 in QuantumScape right now?
Before you buy stock in QuantumScape, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and QuantumScape wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 18, 2023
Why QuantumScape Dropped After a Monster Day Yesterday was originally published by The Motley Fool