Editor's note: This article has been corrected. Dragonfly generated $66 million in revenue during the nine months that ended Sept. 30.

What happened

You may not have heard of Dragonfly Energy Holdings (DFLI -1.10%), but the markets got into a tizzy over this stock this week. The industrials stock skyrocketed earlier in the week and rallied a whopping 55.8% at its highest point in trading, according to data provided by S&P Global Market Intelligence. It cooled down even faster, though, and is trading down 32% for the week as of 11 a.m. ET Friday.

What does this company do, and why is its stock getting so wild?

So what

Dragonfly is a manufacturer of deep-cycle storage lithium-ion batteries. Now, while most lithium battery makers are targeting the hot electric vehicle (EV) industry, Dragonfly's aim is to replace lead-acid batteries primarily in recreational vehicles, marine vessels, and off-grid power installations. Its focus on sectors other than EVs, perhaps, partly explains why this stock is barely known.

So what sent the stock flying? On Dec. 21, Dragonfly received a patent in the U.S. for a dry powder-coating system for use in its solid-state batteries.

Did that ring a bell? Chances are, you've heard about solid-state batteries given how one company in particular is trying to bring them to the masses: QuantumScape (NYSE: QS). It's a hot stock, with investors in EVs watching QuantumScape closely as it develops multilayer solid-state lithium batteries that could change a lot for the EV industry if successfully commercialized.

Dragonfly's solid-state technology uses a solid electrolyte in batteries instead of a liquid, making them "lighter, smaller, non-flammable, and potentially cheaper to manufacture" per the company's claims.

Dragonfly says the patent is integral for the scalable production of solid-state batteries, and it aims to use these batteries as storage for grid, residential, and industrial applications.

Now what

Solid-state batteries are considered revolutionary, and that pretty much explains why Dragonfly stock zoomed after it announced the patent.

The stock, however, then came crashing to the ground since investors may not know much about Dragonfly yet and how the patent will help it, as the company went public only in October after a merger with a special purpose acquisition company (SPAC). Dragonfly generated $66 million in revenue during the nine months that ended Sept. 30, up 14% year over year, on higher battery sales.