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Why QuantumScape Shares Dropped Again Thursday

By Howard Smith - Mar 25, 2021 at 11:03AM

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The company revealed more details regarding its previously announced share offering.

What happened

The stock of aspiring electric-vehicle battery supplier QuantumScape (QS -2.48%) has seen an increase in trading volume this week, as shares have fallen more than 30%. The growing investor interest, and decline in price, have come after the company said it would raise additional capital through a stock sale. 

Today, shares in QuantumScape dropped another 13% before paring those losses. At 10:45 a.m. EDT, shares were down about 7.8% after the company announced pricing on the share offering. 

So what

The company priced the offering at $40 per share, aiming to raise $416 million in gross proceeds. That price represented a 16% discount to Wednesday's closing share price, and it's more than 35% below where the stock closed on the day the company announced the offering. 

QuantumScape CEO ringing NYSE opening bell on day of public listing.

Image source: QuantumScape.

Now what

For perspective, QuantumScape shares rose to about $130 per share after the company's public listing through a SPAC merger in Nov. 2020. That gave the company a market capitalization of almost $50 billion, even though the company is several years away from attempting to commercialize its solid-state battery technology. 

The technology could change the landscape of electric-vehicle battery use, with the promise of a more efficient, safer, faster charging product. But even if it's proven and successfully commercialized, today's stock price still gives the company a $16 billion valuation. That prices in a lot of success that has yet to be accomplished, and brings with it the volatility that shareholders are seeing this week.

Volatility is to be expected in a speculative stock like QuantumScape. If proven out, the capital raise is a positive for investors, as it will be used to advance progress on a pilot line and to help fund a manufacturing facility, the company has said. 

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