What happened
Betting on QuantumScape (QS +1.18%) stock isn't for the faint of heart. After clocking massive 41% gains last week, shares of the electric vehicle (EV) battery maker have made a complete U-turn in the last few days. They were trading 40% lower this week through 10:40 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
If QuantumScape took the markets by surprise in late July with its progress toward the development and commercialization of its solid-state lithium-metal batteries, its latest announcement has hit a nerve in investors.
So what
QuantumScape ended its second quarter with roughly $900 million in liquidity, including cash, cash equivalents, and marketable securities. Although the company said its cash runway should last through the second half of 2025, it requires additional funds to develop its products and commercialize them. So far, QuantumScape has funded its capital expenditures and day-to-day operations through equity, and it is tapping into a stock sale yet again.
NASDAQ: QS
Key Data Points
This week, QuantumScape announced plans to sell shares worth $300 million, which means further dilution of shareholders' wealth. That, of course, didn't sit well with investors, and the stock price took a big hit as a result, reversing all its gains from the previous week.
Now what
The wild swings in QuantumScape stock over the past couple of weeks serve as a great reminder to investors about the kind of volatility and risks that come with investing in speculative stocks.
To be fair, QuantumScape showed some promise in its second quarter when it shipped some high cathode-loading unit cells to several automotive companies. The company claims these higher cathode-loading battery cells can store a lot more energy than QuantumScape's previously shipped cathodes as well the cathodes used in commercial cells that power some of the top-selling EVs today.
QuantumScape also said it is already "working closely" with a prospective automaker to launch the company's first-ever commercial solid-state 5 Amp-hours battery called QSE-5.
Yet, although QuantumScape appears to be making meaningful progress in the solid-state battery technology industry, it's still years away from generating its first revenue. Until then, speculators and traders, and not investors, will continue to drive the stock's price either way.
