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Why QuantumScape Stock Fell in March

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

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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.

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