To The Moon

For the second consecutive week, major US indices $S&P 500(.SPX)$ $NASDAQ 100(NDX)$ $Dow Jones(.DJI)$ traded in a pretty tight range, closing on either side of unchanged.

The best-performing concepts is Solid State Battery. Considering the different perceptions of the stock, this time TigerPicks chose $Quantumscape Corp.(QS)$ to have a fundamental highlight to help users understand it better.

$Quantumscape Corp.(QS)$

$Quantumscape Corp.(QS)$ is developing solid-state lithium-metal battery technology for electric vehicles (EVs) and other applications. The Company’s solid-state lithium-metal battery technology is designed to offer energy density, faster charging, and enhanced safety.

The Company's solid-state electrolyte-separator is a dense, entirely inorganic ceramic. The Company's solid-state battery technology has applicability in other markets, including stationary storage and consumer electronics, such as smartphones and wearables, among others.

Commercial Push

About 3 weeks ago, QuantumScape announced the successful integration of the advanced Cobra separator process into baseline battery cell production. In essence, the SSB technology made another major step towards commercial launch of their solid-state lithium-metal battery technology.

The Cobra separator offers an ~25x improvement to the prior Raptor process in heat treatment speed and occupies a fraction of the physical space per film start. These key advantages are expected to lead to a scalable gigafactory production line.

While Cobra offers a huge improvement in heat treatment, QuantumScape still only plans to release high-volume QSE-5 B1 samples later this year. The 2026 plan involved the intent to implement a low-volume but high-visibility commercial test with the launch customer over multiple phases to verify the ability to scale production of the SSB technology from QuantumScape.

Anyone following the SSB segment knows the benefits of these batteries are as follows:

• Energy Significantly increases volumetric and gravimetric energy densities by eliminating graphite/silicon anode host material

• Fast Charge Enables <15-minute fast charge (10-80%) by eliminating lithium diffusion bottleneck in anode host material

• Life Extends useful lifetime by eliminating capacity loss at anode interface

• Safety Eliminates organic separator and replaces with a solid-state separator that is nonflammable and noncombustible

• Cost Lowers cost by eliminating anode host material and manufacturing costs

The big issue sort of blown off by management in the earnings call is that $BYD Co., Ltd.(BYDDF)$ and CATL in China have both announced more traditional EV batteries with quick charging times. As an example, BYD's Super e-Platform can add 249 miles (400 km) of range in just 5 minutes of charging time using 1,000 kW charging speeds. In addition, the Blade Battery has up to 5,000 charge and discharge cycles.

On the Q1'25 earnings call, the company was dismissive of the battery technology advancements. If BYD and CATL continue making battery advancements, SSBs won't have the huge upside promised a few years ago, with standard lithium-ion batteries used in EVs having extended charging times and questionable lives.

Unsustainable Rally

QuantumScape has soared to $13.60 pushing the market cap to $7.6 billion. While the Cobra launch increases the odds of commercialization, the VW deal does limit the upside due to the reduced capex and focus on royalty revenues.

The consensus analyst estimates are very minimal until 2028 and beyond. The forecasts only have a combined revenue of $65 million through 2027 and these estimates were based on forecasts for the Q2 Cobra announcement.

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At this point, QuantumScape has 3+ years of work moving from test samples to production with partners in gigafactory battery production lines in order to start generating the revenue worthy of the current stock price.

The company has a large cash balance of $860 million, but QuantumScape forecasts producing a $250 to $280 million adjusted EBITDA loss for the year. The cash balance will quickly disappear with any hiccup in the business plan of commercializing the service next year.

The upcoming Q2'25 earnings report on July 23 has the potential to derail the current rally. The market has already priced in massive commercial success and management is likely to reinforce the slow test schedule over the next year after all the Cobra separator introduction was late coming at the very end of the quarter.

The company won't boost any revenue targets from the latest developments. The major hope is another automotive OEM customer.

Takeaway

The key investor takeaway is that QuantumScape still has a long path to commercial success. After the big rally, the stock no longer offers a major value and could quickly reverse the recent gains.

Investors don't necessarily need to sell the stock as the recent momentum appears relentless and likely drives the stock higher in the short term, but the commercial risks won't support a higher price.

Stock Price Forecast:

Here are the target price forecasts for the next 12 months from analysts.

Based on 5 Wall Street analysts offering 12 month price targets for QuantumScape in the last 3 months. The average price target is $6.33 with a high forecast of $8.00 and a low forecast of $5.00. The average price target represents a -56.76% change from the last price of $14.64.

Resource:

https://seekingalpha.com/article/4802192-quantumscape-pump-brakes

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