Can Shares of QuantumScape Hit $15 Again?

Over the last few weeks, shares of QuantumScape (NYSE: QS) exploded from a low of about $4.28 to a recent high of $15.03 with substantial catalysts.

QS Just Announced a Key Production Milestone

For one, it just announced a key production milestone “in the scale-up of its production capabilities: the successful integration of its advanced Cobra separator process into baseline cell production,” as noted in a company press release.

That process is a substantial improvement over its previous system, offering a 25-fold increase in manufacturing speed. All while demanding less equipment footprint.

Plus, as Joey Frenette said the other day, “Solid-state batteries have always struggled to scale. Cobra just made that less of an issue. It also aligns perfectly with QS’s capital-light licensing model. If Cobra delivers as expected, we’re looking at the true unlock mechanism for QS’s commercial future.”

There are risks, but there’s plenty to get excited about

In its most recent quarter, its EPS loss of 20 cents missed estimates by two cents.

GAAP operating expenses and GAAP net loss in Q2 were $123.6 million and $114.7 million, respectively. Adjusted EBITDA loss was $63.0M in Q2, in line with expectations.

There’s also still no revenue. It’s burning cash. It’s still years from. Plus, a $114 million quarterly loss stung a bit. We also have to consider that other players like Toyota and Solid Power are working on solid-state batteries. Any signs of leapfrogging QS could be damaging.

However, the company ended its second quarter with $797.5 million in cash and extended its cash runway into 2029. That’s a six-month improvement over prior guidance.

QS Also Expanded its Collaboration with PowerCo

The company just announced it expanded its existing collaboration and licensing agreement with Volkswagen Group’s battery maker, PowerCo. That upgraded deal secures additional payments of up to $131 million to QS over the next 2 years from PowerCo.

It will come in addition to the $130 million that QS will receive from Volkswagen if QS can deliver “satisfactory technical progress and execution of the full licensing agreement.”

And, as noted in a QS shareholder letter: “This expansion would allow PowerCo the right under the licensing agreement, once entered into, to produce up to an additional 5 gigawatt-hours (for a total of up to 85 GWh) of QS cells annually, including for customers outside the Volkswagen Group. PowerCo has also secured the future right to license certain advanced QS technology beyond our first-generation QSE-5 platform.”

The company also signed a Joint Development Agreement with a global auto major OEM, or original equipment manufacturer. While the QS note did not name the OEM, it did say the JDA builds on another relationship. That expands the company’s customer base beyond PowerCo.

With QS, despite some hiccups, it just marked a substantial step into commercialization thanks to its expanded partnership with PowerCo, and its new JDA with a major OEM. Plus, its new Cobra process is now in place, and it successfully extended its cash runway into 2029. 

In short, QS is one to watch moving forward.