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QuantumScape Has A Promising Idea Along With Many Uncertainties

Oct. 06, 2021 9:26 AM ETQuantumScape Corporation (QS)39 Comments
Brendan Du profile picture
Brendan Du


  • QuantumScape has retreated 83% from the high of $131.68 since December 22, 2020, and the stock expects to stay volatile.
  • QuantumScape solid-state battery could provide solutions to the existing dendrite, energy density, battery cost, and driving range issues but years away to be proven in a production cell.
  • A huge 145 million EV addressable market is providing the potential to grow but QuantumScape needs to overcome many obstacles before tapping into this big market.

Power supply connect to electric vehicle for charge to the battery. Charging technology industry transport which are the futuristic of the Automobile. EV fuel Plug in hybrid car.
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Investment Summary

I issue a SELL recommendation for QuantuamScape (NYSE:QS), with a one-year target price of $17.49, presenting a 19% downside potential on the closing price of $21.48 on August 27, 2021. The target price is based on a Relative Valuation. My

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Brendan Du profile picture
Through writing in Seeking Alpha, Brendan hopes to share his views about renewable energy stocks with those who are passionate about the energy transition :)

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (39)

Blackrock added 2.5M shares in Q3. They had 5.3M shares at the end of Q2, now 7.8M shares of QS, a 47% increase in share count in Q3.
Enjoy the rest of the day folks!!
Dr Investor profile picture
Brendan Du, so far, QuantumScape ($QS) gained 29% in less than a month since you published your "sell" recommendation on October 5, 2021.

The following are my targets for $QS.

Late 2021: $50 (finally, the false short report by Scorpion Capital is rebutted)
Late 2022: $100+ (prepilot factory begins production of field-test EV batteries
Late 2023: $1,000+ (prepilot EV field tests successfully completed, OEMs pledge commitment, QuantumScape becomes the first company to market a revolutionary solid-state battery, more OEMs and more factories appear on the horizon)
@Dr Investor yes author should be banned for accepting money to write a negative article.
Test results: www.autoevolution.com/...
10 Nov. 2021
@Dr Investor What is the math behind $1,000+ ? What battery market are you thinking about and what share for QS do you assume ?
Dr Investor profile picture
@padang $QS has a target of $480 in their recent SEC filing, and I'm doubling that giving the retail interest in this stock. They project a 20% share of the global EV battery market, excluding China, in the same SEC filing.

just a worthless article. the stock price dropped from $130 to $19 and this guy is bearish.
Sell? U must have lost your mind! Mystery OEM partner sounds like Brookfield is prepping to be 1st
charly333 profile picture
QS is like a biotech, they are doing research. To succeed, they must be very lucky. I am a sceptic here. It's very hard to put a valuation on QS with the little insight we have.
@charly333 Totally agree with that. You just don’t know. But if you are part of it early you stand to make 100x your investment. I bought a little and will let it ride for 3 more years and see what happens. It’s either a total write off or a huge win. Like a lottery with better odds in my opinion.
charly333 profile picture
@Zola G If you understand it as a lottery ticket and use a tiny sum, that's fine.
D Lombardo profile picture
@charly333 Actually you answered your own question. It's quite easy to value Quantumscape. Use Biotech metrics like Price/Cash, Price/Book.

There's high risk, but you can value them on a risk-adj basis.
GreedyBear profile picture
Highly risky business, like Tesla a few years ago. QS either make it or break it in 3 years. Put it for a few percent of your portfolio is a reasonable bet
My concern is QS published the positive working data at extreme temperature range only. QS did not show the data for the normal temperature range.
Could it be that their 10 layers battery does not work at room temperature?
NorEast Invest profile picture
Buy the dip
NorEast Invest profile picture
@Sandis Weil Beary sad today for the bears
12 Oct. 2021
What would be your optimistic hypothesis ? x10 Sales and a $65B valuation by 2028 ?
@padang 65 billion valuation?! if this works we are talking hundreds of billions
13 Oct. 2021
@DomL How do you go from $6.4B sales to hundreds of billions valuation ?
NorEast Invest profile picture
@padang We don’t even have precedent for a valuation on this type of technology. If it works (it seems promising currently) the applications are massive, hundreds of billions seems realistic
I just don't see a need for this article.
"1. QuantumScape may run the risk of not developing a solid-state battery cell and mass production for widespread adoption. QS is at the early stages of testing the 4-layer and 10-layer cells. To achieve mass production capacity, the company needs to constantly invest capital and develop potentially 20-layers or more before the cell can be used in an EV."

It's significantly worse than that. Quantumscape's own SEC filings say they need "over a hundred" layers.
Brendan Du profile picture
@KHinn Thank you for letting me know KHinn. Do you mind sharing which SEC filing QS mentioned about the 100 layers? I probably missed that information but I would love to check it out. Thank you
@Brendan Du www.sec.gov/...

See "Product Development" on p. 7.
Brendan Du profile picture
@KHinn Thank you for the information.
This posting is a general review of battery research that delivers little new information. Stock price calculations are ludicrous.
LIVING PROOF profile picture
Thanks for this thorough examination of QS.

Basically, it seems many challenges exist yet the potential keeps a number of smart minds invested either financially or as a passion to approach the mountain ahead.
Brendan Du profile picture
@LIVING PROOF No problem. Yes, many obstacles for QuantumScape and other solid-state battery companies to overcome before we can see them in daily life.
Comparing an energy company to life science firm for purposes of valuation is a foolish.
Brendan Du profile picture
@Objective See thank you for letting me know your thought. Could you elaborate on why you don't agree on this topic? Constructive feedback with background would be appreciated.
NorEast Invest profile picture
@Brendan Du “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” - Mark Twain
@Brendan Du Life science has a limited market for customers at specific times. The energy market has customers at all times therefore has more demand. Life science and all other sectors profits depend on the price of energy. The share price today of $30+ proves your analysis is wrong.
I think similar to ASTS this will either be a home run or a strike out. For the former there are big telecom investments and VW engineers have kicked the tires on QS. There is no one reading this who can foretell the future so you either risk or you don’t.
Brendan Du profile picture
@joelav I agree. Nobody knows if QS, SES, Solid Power, Toyota, or any other solid-state battery company can be successful. All the major OEMs are just making the bets now who might be able to massively produce EV solid-state batteries in the future. To me, investing in any of these companies now is more like venture capital investing in the public space.
Very first line has an error in it. It is Dec 2020. I do look forward to reading the article.
Brendan Du profile picture
@utcasey99 thank you for letting me know. I have updated the number. Best regards.
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