What happened
Battery maker QuantumScape (QS -1.97%) reported its 2022 fourth-quarter results last night, and investors are reacting with a big sell-off in the stock today. QuantumScape shares plunged as much as 17% at the open Thursday morning and remained lower by 12% as of 10:20 a.m. ET.
Image source: QuantumScape.
So what
The developer of solid-state battery cells for the electric vehicle (EV) sector beat analyst estimates with a narrower loss than anticipated. It reported a loss of $0.25 per share when analysts expected a $0.29 loss. But investors were more focused on a comment made by management in the release. QuantumScape made meaningful progress in the development of the multilayered battery cells needed to power EVs in 2022.
The stock had been marching sharply higher in 2023. But that trend reversed today after management indicated battery cell reliability is not yet where it needs to be. The drop also comes as the stock has jumped more than 80% year to date, including a 32% spike yesterday.
Now what
The rise in shares leading up to the earnings release came as investors sensed the company was getting closer to meaningful progress in the use of its batteries. QuantumScape shipped its initial solid-state battery to customers for testing for the first time late last year.
But management also seemed to hit the brakes on the most optimistic scenarios to achieving successful commercialization. In the report to shareholders, management stated, "We can report that generally, most cells have performed well on initial testing, including fast charge and early cycle capacity retention; however, we must continue to improve cell reliability as we move from prototype to product."
That's not what investors wanted to hear from the pre-revenue company. It remains early in the process, however, and any investor should know the stock is highly speculative. 2023 should be a telling year for the company's future prospects.
