QuantumScape stock price has staged a strong comeback and formed a golden cross this year. QS surged to a high of $8.50 on Tuesday, its highest level since July last year. It has soared by over 140% from its lowest level this year, pushing its market capitalization to over $4.5 billion.
This article explores why the QS stock has jumped this year, and why it faces major fundamental risks, including insider sales.
Why QuantumScape stock is soaring
QuantumScape is a technology company in the electric vehicle industry, where it is aiming to become a major battery supplier. Although it has not yet started mass production, it has secured a major partnership with PowerCo, Volkswagen’s battery division.
QuantumScape’s primary business is the development of solid-state batteries, which some analysts believe will be the future of the industry. The batteries have a higher energy density than existing ones, charge faster, and have a longer lifespan.
QuantumScape stock price has surged in the past few weeks after it announced a major milestone in the scale-up of its production capabilities and the successful integration of its advanced Cobra separator process into its baseline cell production.
This was a major milestone because Cobra forms the foundation of its high-throughput, continuous-flow separator production. It also offers a 25x improvement in heat treatment and speed.
QS stock has also jumped because of its ongoing work with its launch customer and has already shipped samples of its Raptor-powered battery. With the new breakthrough, analysts believe that it is in the final stages of mass production. The full-scale production of these cells will begin in between 2027 and 2028.
The company is also working on installing higher-volume cell assembly equipment to match higher throughput of Cobra. It also inked a deal with Murata Manufacturing for its ceramics.
Is it safe to buy QS stock?
While QuantumScape stock has surged, there are several reasons why it remains a risky investment. First, the battery industry is evolving so fast, such that better technologies may come to the market before its commercialization efforts.
For example, in China, BYD has announced a breakthrough in battery technology that can be charged in under five minutes. Similarly, CATL has announced similar breakthroughs, and more firms are expected to do the same, making the industry more competitive.
Second, QuantumScape’s primary customer is the Volkswagen Group, one of the leading players in the automotive sector. VW has also become a big investor in QS.
It is always risky for companies that depend on a single customer. For one, it is not guaranteed that VW will become a successful player in the electric vehicle industry. Also, the company may opt to use other batteries such as those made by CATL, since the two have a relationship.
Third, it will take a long time for QuantumScape to become a profitable company. The most recent results showed that it had a net loss of over $114 million, a trend that will continue.
QS ended the quarter with over $153 million in cash and equivalents and $706 million in marketable securities. This means that the company will likely need oto raise cash either in 2026 or in 2027.
The other risk is that insiders have started selling their shares. Insiders have sold over 2.1 million shares in the last three months and 5.38 million in the last 12.
QuantumScape share price forecast
The daily chart shows that the QS share price has gone through a short squeeze in the past few weeks. It moved above the upper side of the descending channel and has formed a golden cross. It has also become highly overbought.
Therefore, while the stock may continue rising this week, there is a high chance that it will pull back and retest the support at $5.
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