QuantumScape Ends Week on High, Outperforming Broader Market

Solid state lithium metal battery company QuantumScape Corporation (NYSE: QS) recently closed the week on a high of $6.27 per share and 0.64% higher than the previous trading session. QuantumScape shares went up by 0.52% on the S&P 500, 0.9% on the Nasdaq, and 0.12% on the Dow.

The recent gains come after QuantumScape shares went down by 8.52% over the past month amid a 12.6% gain in the auto-tires-trucks sector and a 3.85% gain on the S&P 500.

As one of the top solid-state battery manufacturers on the globe, QuantumScape has the potential for significant growth. Current lithium-ion electric vehicle batteries use liquid electrolytes. This makes them susceptible to thermal runaway and reduces battery efficiency in extreme temperatures. Thermal runaway often occurs because of an internal short circuit caused by poor battery maintenance or physical damage to the li-ion battery.

These batteries also have a relatively limited range, are slightly heavier and can be extremely expensive to manufacture. On the other hand, solid-state batteries leverage solid electrolytes, which grant them greater energy density, faster charging, resistance to wear and tear, and increased safety.

Transitioning from traditional lithium-ion batteries to solid-state alternatives would allow automakers to equip their electric cars with cheaper, safer and more energy-dense batteries.  With range anxiety and cost currently acting as the top barriers to electric car adoption, adopting more advanced EV battery chemistries will be key to increasing electric vehicle adoption in the United States in time to meet green-energy goals.

Companies such as QuantumScape, which develop alternative battery chemistries including solid state, are poised to reap big rewards once major automakers such as Tesla, Ford and General Motors ditch lithium-ion batteries for more advanced battery chemistries. Now that QuantumScape shares have rallied after faltering for most of February, investors will likely monitor its forthcoming earnings report to help inform their investment strategies. The company’s upcoming earnings per share are predicted to increase by 16.6% compared to the same period last year at -$0.20.

Analysts have also amended their performance estimates for the company to reflect the most recent near-term business trends. Upbeat changes in analyst estimates typically point to a favorable outlook on a corporation’s business health and bottom-line performance.

The Zack Rank system, a proprietary model designed to provide functional ratings using factors such as estimate revisions, ranks QuantumScape at a Hold (#3). The ranking system ranges from Strong Buy (#1) to Strong Sell (#5) and most of its top-ranked stocks have had a +25% average annual gain since 1998.

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