QuantumScape is developing next-generation batteries for electric vehicles.
Ronny Hartmann/AFP via Getty Images
The electric-vehicle battery pioneer QuantumScape closed 2020 with an epic stock-price run. Shares were hammered on the first trading day of the new year.
QuantumScape (ticker: QS) stock was down about 41% Monday to roughly $49 a share. The stock closed 2020 at $84.45.
The Dow Jones Industrial Average and S&P 500, for comparison, were down 1.3% and 1.5%, respectively.
It’s a harsh start to the year. And there isn’t much news. But Quantum investors should be used to stock-price volatility. From their low for the year to their December high, the shares gained more than 1,000% in 2020.
At the stock’s highest point, QuantumScape was the second-most valuable car company in America, trailing behind only Tesla (TSLA) and worth almost $60 billion, based on fully diluted shares outstanding. General Motors (GM), a titan of the industry, also boasted a market value comparable to the $60 billion figure.
Quantum’s market capitalization now sits at about $25 billion. Magna International (MGA), a large auto supplier, has a market capitalization of about $21 billion.
Quantum is developing next-generation lithium-ion batteries for EVs. The company’s batteries use a pure lithium metal anode and no liquid electrolyte—common in other batteries, including regular AAA cells—a combination that promises faster charging, more range, and better safety.
But success isn’t assured. Quantum is in the preproduction stage, and doesn’t expect to have significant sales for a few more years. Tesla, GM, and Magna each generate tens of billions of dollars in annual sales.
It isn’t clear what is driving Quantum stock down. There are no new research reports from Wall Street analysts, though there is a cautious post on Seeking Alpha, the crowdsourced research platform, about Quantum’s technology.
That could be behind the slide, though it is also possible that a so-called January effect is in full swing. Stocks with large prior-year gains sometimes sell off early in the following year as investors sell to lock in profits. Doing that enables investors to put the cash raised to work elsewhere right away, while avoiding paying capital-gains taxes for many months.
The size of the decline can be proportional to the size of the prior gain. Both are substantial in the case of QuantumScape stock.
What Quantum is worth is even harder to say. Only one analyst—Bernstein’s Mark Newman—covers this stock. His target for the share price is $28, valuing the company at roughly $13 billion, a bit more than half of its current market capitalization.
Write to Al Root at [email protected]
