QuantumScape’s big sales are still years away, according to investors.
Courtesy QuantumScape, a solid-state battery technology business, revealed a larger-than-expected first-quarter loss. The stock market fell after the release, but earnings may not have been the catalyst.
(ticker: QS) reported a 21-cent loss per share due to no sales. No sales were expected to result in a loss of 15 cents per share, according to Wall Street.
In after-hours trading on Tuesday, shares were down 2.8 percent. The miss isn’t significant, though, because the company is still in its early stages of development. Significant sales will take years to come.
Investors have recently shied away from more speculative growth stocks. QuantumScape stock was down roughly 35% year to date at the closing of Tuesday trading. Likewise, the
Year to date, the Russell 1000 Growth index is down 20%. In comparison, the S&P 50 and the Dow Jones Industrial Average have lost 12% and 9%, respectively, this year.
From a financial standpoint, the quarter seemed to have gone well. QuantumScape spent $39 million on capital expenditures, which was in line with management’s expectations. The company intends to spend $35 million to $65 million on capital expenditures in the second quarter, similar to the first quarter.
The company’s spending plans for the entire year remained unchanged. QuantumScape continues to forecast capital expenditures of $325 million to $375 million and operating expenses of $225 million to $275 million. By 2023, the corporation should have around $800 million in cash on hand.
The company made progress from an operational standpoint. The company evaluated 16-layer battery cells and found that they performed similarly to single-, four-, and ten-layer batteries. To prove that its technology can function inside a vehicle that would charge hundreds of times and drive tens of thousands of miles over its life, QuantumScape must layer by layer build up its battery cells, which look like a deck of cards.
The solid-state battery technology developed by QuantumScape is still years away from commercialization, but it looks promising. Compared to traditional lithium-ion batteries, these batteries promise lower costs, faster charging times, increased safety, and longer life.
Investors are still evaluating the company against its milestones, despite the fact that sales are still a long way off. Cells with more layers and the establishment of a prototype manufacturing plant are next on the agenda for the company. The QS-0 pilot plant will demonstrate that the cells can be mass-produced at scale. According to the business, QS-0 should begin sending samples to automotive clients in 2023.
Market circumstances, as well as milestones, are critical for any organisation. Investors dislike speculating at a time when interest rates are climbing and inflation is raging.