The big move in QuantumScape's (QS -2.74%) stock this week came after the company reported its second-quarter financial and operational update on Thursday. The initial reaction was a sharp 10% drop in shares. But the stock recovered over the course of the session as investors digested some more positive items in the mixed report. Heading into Friday morning trading, QuantumScape shares had slipped just 4.2% for the week, according to data provided by S&P Global Market Intelligence.
Whether QuantumScape's quarterly update was positive or negative depends on an investor's point of view. The technology is progressing well, with the company announcing it has successfully developed its first prototype 24-layer battery cell. That comes after two years of progress from a single cell to multilayer cells that have been tested successfully.
The 24-layer cell is what will be needed for electric vehicle (EV) battery commercialization, making it a significant achievement at this stage of development. But the company also effectively pushed back its time frame for potential commercialization in the report. So it seems to be on track technologically, but at a slower pace than originally projected. That left investors with mixed feelings.
QuantumScape still expects to have its pre-pilot production line in operation in 2023, but it won't have all the equipment needed for higher-volume production in place at that time. Considering the extensive sample testing that will be required by automotive customers, the company also now foresees a 36-month process that will parallel its pre-pilot production. That effectively means the potential start of production has been pushed back from 2024 to 2025.
For long-term investors that entered the stock as a speculative investment, the more important factor is whether the technology can be successfully implemented. The massive potential for a more efficient and safer EV battery is what brings value to QuantumScape. The company also said it added two new prospective automotive customers, bringing the total to six. The stock's partial recovery from that initial double-digit drop seems to indicate that, while disappointing, the extended timeline isn't as big a factor as the progress QuantumScape is making.