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Why QuantumScape Dropped 9% Today

By Howard Smith - Jan 11, 2021 at 5:08PM

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The solid-state battery maker's shares have been especially volatile recently.

What happened

Shares of QuantumScape ( QS 1.10% ) have been on a wild ride since it began trading publicly in late November 2020. After soaring close to 450%, shares have declined more than 60% over the last three weeks. 

Shares were down 9% today as of 3:30 p.m. EST.

So what 

A main driver of the spike in shares was the release of performance data on the company's solid-state battery technology on Dec. 8, 2020. But a 41% single-day drop on Jan. 4 prompted the company to release a clarification related to QuantumScape's share registration statement. 

QuantumScape ringing bell on New York Stock Exchange (NYSE).

Image source: QuantumScape.

The company said it released the note to investors to clarify confusion that may have stemmed from the filing of its SEC Form S-1. It wanted to reinforce that QuantumScape registered 306 million shares for resale, and that other than the 50 million shares purchased by private investment in public equity (PIPE) investors, shares remain subject to lock-up restrictions.

Now what

After that clarification last week, shares regained much of the previous day's 41% loss. But shares have been drifting down since then, including today's drop. While the technology has much potential, and the electric-vehicle (EV) market for its batteries may be enormous, the company remains several years away from commercialization and is currently valued at over $20 billion. 

The solid-state battery technology is expected to offer advantages in charge time, cycle life, safety, and operating temperature over lithium ion batteries. Investors will need to have a long time horizon, as well as a stomach for volatility, to hold shares until the company proves out its technology.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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