Please ensure Javascript is enabled for purposes of website accessibility

Why QuantumScape Stock Fell in March

By Lou Whiteman - Apr 1, 2021 at 8:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company added to its cash reserve -- and share count -- during the month.

What happened

Shares of QuantumScape (QS -2.48%) fell 18.5% in March, according to data provided by S&P Global Market Intelligence, weighed down by a plan to sell additional stock. The stock was actually up 12% for the month prior to announcing a 13 million share secondary offering.

QS Chart

QS data by YCharts

So what

QuantumScape has taken investors on a volatile ride since joining public markets late last year, initially climbing as much as 450% before falling back soon after. The stock has doubled in its short time traded but continues to experience a lot of turbulence.

The company, which is developing a solid-state battery that would be a huge improvement over the lithium-ion batteries currently used to power electric vehicles, is still years away from commercializing its tech and, for now, trades mostly on sentiment. Its shares ebbed higher and lower during the month, along with other high-risk growth stocks, as investors seemed torn about how much risk they wanted in their portfolio.

Diagram of an electric car parked at a charging station.

Image source: Getty Images.

The month took a turn for the worse on March 22 when QuantumScape announced a new secondary offering, eventually selling 10.4 million shares at $40 apiece. Investors tend to react negatively to offerings because they dilute the value of each individual share and are often priced at a discount.

Now what

QuantumScape started April on a positive note, announcing it had successfully met the technical milestone required for it to receive an additional investment from partner Volkswagen. Volkswagen is an important potential customer -- not just an investor -- and the progress was welcome news.

The long-term outlook, however, hasn't changed. QuantumScape could end up a massive success or its technology could prove impossible to commercialize, and we won't know which outcome is more likely for years. Expect a lot of continued volatility in the meantime.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

QuantumScape Corporation Stock Quote
QuantumScape Corporation
$11.80 (-2.48%) $0.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.