Quantumscape Corp (NYSE: QS) has entered headlines on Wallstreet over the past three weeks after the stock tumbled 57%. The stock went into free fall over the New Year period before finding a new equilibrium at $56.79 a share. Following the sharp decline, CEO Jagdeep Singh affirmed his confidence that the volatility was related solely on supply and demand factors and not a concern for the business. This article will breakdown the questions surrounding QuantumScape and if the stock can bounce back in 2021.
Table of contents
What are analysts saying about QuantumScape?
Firstly, coverage from analysts since the completion of the merger has been limited. With only one 12 month price target from Bernstein Research. The stock has been following an extremely volatile trading pattern which would be the cause for some delay in analysts covering a 12 month forecast. The following price target available is below:
30/11/2020 Bernstein Research – analysts set their 12 month price target for QS stock to $28 a share. This suggests a downside of 50% from the current trading price. Bernstein analysts have also rated the company as Underweight in comparison to its competitors and industry performance.
The $28 price target was listed on the 30th of November, when the stock was trading between $30-$40 a share. Since that price target we are yet to have another analyst add their input on the market volatility, which may suggest it really is too early to tell which way this will go. It will be interesting to keep watch of any price target updates and coverage as we move into the new year of trading as this will suggest the “smart money” consensus.
Forecasts for QuantumScape in 2021 and beyond?
With little to no guidance from larger financial institutions, we will dive deeper into the forecasts for Quantumscape stock for the fiscal year of trading and beyond.
The financial positioning of the company is in its pre-revenue phase. The company does not expect to commence manufacturing until 2024. The company reportedly expects revenue to grow gradually from $39 million in 2025 to $275 million in 2026 to $3.2 billion in 2027. This outlook is speculative as a lot can happen within a 4 year time period of no revenue. This has painted some doubt in investors confidence and therefore attributed to the extreme volatility of trading volumes.
What’s in the pipeline for QuantumScape?
Firstly, it is important to note the company will not enter is manufacturing phase until 2024. The company has the backings of Volkswagen AG, Bill Gates and Khosla Ventures. Additionally, the $680 million funding from the SPAC merger will provide the company the capital to expand and commercialise the “innovative” battery.
This transaction allows QuantumScape to fund development and commercialization of our OEM-validated battery technology as we look forward to playing our part in the electrification of the automotive powertrain, helping transform one of the world’s largest industries and fostering a cleaner future for all.”Jagdeep Singh, Founder and Chief Executive Officer of QuantumScape.
What are the risks associated in the short term?
Evidently, the companies stock price has remained extremely volatile as investors struggle to correctly price the market value. Furthermore, the large swings in investor momentum cement doubt in investors minds which has weakened the stocks sentiment. It is clear that the imminent threat will be the loss of investor confidence over the period the company continues to develop its technology (pre-revenue phase). This will test many of the long term shareholders however will also provide them greater opportunity for entry.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.