QuantumScape (NYSE: QS) has seen a spectacular 110.56% gain over the past 10 trading days, nearly doubling from $7.01 on July 7 to $14.76 at the time of publication on July 18.
The electric vehicle battery developer, which has seen its stock rise by over 237% in the past month, has now extended its winning streak to eight consecutive sessions.
QuantumScape’s surge began after the company announced it was moving into production with its Cobra separator, resulting in a tripling of the stock price since then.
Lucid-Uber deal fuels the rally
The recent partnership between Lucid and Uber further fueled QuantumScape’s rally, even though the company isn’t directly involved in the arrangement.
Uber (NYSE: UBER) announced a $300 million investment in Lucid for a robotaxi partnership that includes autonomous vehicle technology from startup Nuro.
The deal has broader implications for the EV battery sector, as Lucid (NASDAQ: LCID) has expressed intentions to incorporate solid-state batteries into its vehicles due to their superior energy density, faster charging capabilities, and extended range compared to traditional lithium-ion batteries.
While nobody knows which battery partner Lucid might pick, the deal has investors betting on the whole solid-state battery space.
Wall Street warns of a 57% downside ahead
The explosive price action stands in sharp contrast to Wall Street analyst sentiment. Five analysts covering QuantumScape have issued a collective “Hold” rating, with four holds, one buy, and zero sell recommendations over the past three months.
More telling are the price targets, which suggest significant downside ahead. Analysts project an average 12-month price target of $6.33, representing a 57% decline from current levels around $14.79. The forecasts range from a high of $8.00 to a low of $5.00, with even the most optimistic projection calling for a nearly 46% drop from today’s prices.
Q1 earnings snapshot
QuantumScape continues operating as a development-stage company with substantial cash burn. First quarter results showed a net loss of $114.4 million and an adjusted EBITDA loss of $64.6 million, keeping the company within its full-year guidance of $250-280 million in adjusted EBITDA losses.
The company’s partnership with Volkswagen’s PowerCo battery division represents its primary path toward commercial production. QuantumScape is increasing its spending to establish next-generation cell production lines as it works to scale its solid-state battery technology for mass-market applications.
Investors will get their next update when QuantumScape reports second-quarter earnings on July 23 after market close.
Featured image via Shutterstock.
