QS Stock: the risk-return ratio becomes attractive



The actions of the future manufacturer of electric vehicle batteries QuantumScape (NYSE:QS) have plunged in value this year. QS stock has fallen 74% since the start of the year. However, the stock appears to be picking up again, climbing nearly 5% in the last five trading days.

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QuantumScape continues to meet its targets ahead of schedule, giving investors confidence in its growth prospects. It remains a high risk, high reward game, but can reach the “Holy GrailOf the battery industry.

An attractive entry point

The company has already made crucial breakthroughs in solid-state battery technology. And the QS stock has finally broken through its resistance and should move in a more positive direction.

Average analyst estimates for the stock suggest that it is trading at a discount of around 70% to its actual value. As a result, QS stock has reached an attractive entry point for investors confident in the company’s long-term prospects. Over the past few months, it has certainly given investors plenty of reason to be confident about its long-term outlook.

Recent positive developments

Along with its second quarter results, QuantumScape highlighted the progress made in the manufacturing sector. His management explained how the company’s ceramic material can be used as a solid-state separator, overcoming the challenges presented by battery cells.

Earlier in the year, QuantumScape successfully built its first four-layer battery cell. He recently announced the successful production of its first 10-layer battery cells, which he is currently testing. Therefore, it comes close to producing a commercially viable product.

Previously, the company’s goal was to start testing its multi-layered battery cell by the end of this year, but the company hit that target ahead of schedule. In addition, its management informed investors of the progress of the development of its pre-pilot manufacturing plant. QuantumScape estimates that the plant “will help {the company} meet the demand for test cells from potential customers. “

The company signed a long-term lease on the 197,000 square foot facility a few months ago and increased its number of employees to over 400.

Volkswagen assistance

QuantumScape has a decisive advantage thanks to its alliance with Volkswagen (OTCMKTS:VWAGY), which could cause QuantumScape to cross the finish line. Volkswagen is QuantumScape’s main customer and plans to produce 3 million EVs each year until 2025.

In addition, Volkswagen has invested more in electric vehicle programs than most other automakers. So if QuantumScape can meet its targets, the German auto giant is likely to become a long-term lucrative customer for it.

QuantumScape has a liquidity position, with $ 1.5 billion cash flow at the end of Q2. It plans to enter 2022 with $ 1.3 billion in cash. It should have enough cash to finance its manufacturing plant.

Creating a key risk, the company, which has a market capitalization of over $ 9 billion, does not expect to generate revenue until 2024. In addition, it plans to spend nearly $ 300 million this year. At this rate, she may have to take on more debt. However, with Volkswagen’s backing, liquidity shouldn’t be an issue for her.

The result on QS Stock

QuantumScape’s mission is to commercialize its solid-state battery technology and forever transform the electric vehicle industry. It continues to deliver on its promises and has the backing of the world’s largest automaker, Volkswagen.

The battery maker also has enough funds to execute its plans until next year. If it continues to meet its targets, it will have the backing of Volkswagen, which plans to stay in the electric vehicle market for the long term. So, if you can bear the risk posed by its actions, QuantumScape is an exciting investment in electric vehicles that could pay great dividends in the future.

As of the publication date, Muslim Farooque does not have (directly or indirectly) any position on any of the titles mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com publishing guidelines.



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