QuantumScape (QS 16.86%), a developer of solid-state batteries for electric vehicles (EVs), is again becoming quite an item on the stock market. Following the company's most recently published earnings report, investors have become notably more bullish on its shares, pushing their value higher.
In my view, they have plenty more room to grow. Here's why.
A revolutionary battery solution
A key factor in my optimism is that QuantumScape is on the cutting edge of EV storage technology. The batteries it's developing hold the potential of being far more powerful than the lithium-ion products that currently power EVs, and the vastly extended range they promise would be an instant boon for the industry.
The big catch is that QuantumScape is still in the investigational stage with its technology. However, designing and implementing any disruptive technology takes time. Meanwhile, the company is making clear progress and its QSE-5 battery has tested well when put through its paces.
The company also has a major auto partner. It's collaborating with Volkswagen's battery unit, PowerCo, to bring QuantumScape's innovations into the world.
If all goes according to plan, PowerCo will license this technology for batteries that will go inside 500,000 vehicles annually. The $130 million prepayment QuantumScape is getting in the deal is a major sign of confidence in the technology it's developing.
NYSE: QS
Key Data Points
Revving up for success
The aforementioned earnings release provided more hope for QuantumScape bulls like myself.
Although the pre-commercial-stage company booked its usual net loss, it revealed that it should soon start the initial phases of production of its Cobra separator process, an important stage in the making of solid-state batteries. In a more exciting development, management aims to ship the first samples of the QSE-5 to EV industry players this year.
In short, while QuantumScape remains a speculative investment at this point, its technology holds vast potential. It also has a large and growing addressable market in the EV industry. This is a stock that could very well explode in price before long.
