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The “story” of QuantumScape Corporation’s (NYSE:QS) stock market thesis continues to fall since its huge post-IPO uptrend continued to hang out among its “long-term” investors.
In our previous articles, we have continuously warned investors about stocks like QS. QuantumScape is still a long way from demonstrating its advertising good fortune in the face of the expanding festival of major automakers and battery manufacturers. Therefore, we suggested investors looking to take part in the area of electric vehicles or batteries to seek proven business leadership.
As a result, we are not surprised that QS collapsed to $10 at its recent May lows, rising around its short-term aid level. investors stay away from highly speculative games like QS stocks, unless they eventually need to burn out.
Therefore, we reiterate our Hold on QS inventory rating and urge investors to withdraw.
FCF Consensus Estimates and QuantumScape Revenue (S
Readers will likely practice that QS will not make the flow of loose currencies (FCFs) positive until FY26 and deserves to continue burning coins quickly. It reported $1. 35 billion in coins and equivalents on its balance sheet in the first quarter. Given its “phenomenal” FCF entry rate estimates, we might not be surprised if the company wants to raise coins to move forward. But, given the dilapidated state of its current price, it will be difficult to raise a significant budget without a really extensive potential shareholder dilution.
In addition, investors should not underestimate CapEx’s immense challenge and needs to commercialize and evolve its technology. CEO Jagdeep Singh explained at a recent convention how the IPO had provided the mandatory liquidity for its efforts. Articulated (edited):
Surely this is positive, because we have access to much larger capital reserves than those we have in personal markets. Battery production is capital intensive, factory structure is not cheap. -Bloomberg
We respect Singh’s ambitions to be among the leaders in the revolution of the battery market for electric vehicles with solid-state batteries. But, as investors, we are not predisposed to someone’s big ambitions. In addition, QuantumScape has not shown that it can manufacture on a large scale. Also, why do retail investors fund QuantumScape dreams when it has nothing to offer investors right now?No significant income, sustainable loose money flow, no dividends?Hope is not an investment thesis, of course.
BYD Consensus Estimates (TIKR)
CATL Consensus Estimates (TIKR)
Investors deserve not QuantumScape in a silo. Although your customers look promising, many competitors are successful and have enough resources to compete. The world’s largest battery brands are not founded in the United States. Smart inverters deserve to know that CATL (#1) and BYD (OTCPK:BYDDY) (OTCPK:BYDDF) (#3) are the leading battery brands in China based on battery shipments. LG Energy Solutions of South Korea is No. 2 behind CATL in the world ranking. CATL and BYD continue to grow rapidly and succeed in FCF.
China dominates the refining and manufacture of uncooked materials for batteries. Barron’s reported that China “refines 60% of the world’s lithium, controls 77% of the world’s mobile battery capacity and 60% of the world’s battery component manufacturing. “industry for China from its global strategy of dominance of electric vehicles.
In addition, it has a complete and well-supported chain of origin, which the Chinese government considers strategically important. Therefore, we believe it will be a gigantic task until QuantumScape even has a race against two of China’s leading battery manufacturers.
In addition, car brands (legacy and pure BEVs) are also moving into the solid-state space. For example, NIO (NIO), the leading Chinese manufacturer of pure NEVs, is expected to launch its semi-solid state batteries with its battery in the fourth quarter of 2022. In addition, General Motors (GM) and Honda (HMC) also recently expanded their partnership to expand solid-state batteries for their electric vehicles.
The race will be accentuated and QuantumScape faces a competitive market opposed to successful corporations with a deep production bank.
In addition, CATL also noted earlier this year that “the progression of solid-state batteries still faces technical difficulties and mass production will take a long time. “As a result, the company expects solid-state batteries to account for 1% of the market share through 2030.
QS Stock Price Chart (TradingView)
Our research of value action shows that QS stocks may be at a short-term low after their strong sell-off in May. However, despite the minimum, we are not in a hurry to run a speculative industry contrary to the trend. QS inventory. We believe QS inventory is too speculative for our convenience. It’s too much story inventory, and there are enough inventory story games recently.
In addition, the series of bull traps also proved that QS inventory was the favorite of market makers to catch troubled buyers off guard, as mentioned above. It is possible for inventory to succeed in the resistance of around $19 before falling further and breaking its $10 support at its lowest point. next lows.
Ah, yes, before you finish, keep in mind that the members of the company continued with their shares (without any insider trading).
As such, we reiterate our Rating of Keep in QS shares. We urge investors to reduce their exposure in their next prospective recovery. We also warn new investors to stay away from these stocks.
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