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Investors know that significant sales are still years away for QuantumScape.
Courtesy QuantumScape
Solid-state battery technology company QuantumScape reported a larger-than-expected loss in the first quarter. Shares fell after the report, but earnings may not have been the trigger.
QuantumScape
(ticker: QS) reported a loss of 21 cents per. share from no sale. Wall Street was looking for a loss of 15 cents per. share from no sale.
Shares fell 2.8% in after-trading on Tuesday. However, the loss is not meaningful as the company is still in the development stage. Significant sales are still years away.
Recently, investors have avoided more speculative growth stocks. By the end of Tuesday’s trading, the QuantumScape stock had fallen about 35% year to date. Corresponding
Russell 1000 growth index
has fallen 20% year to date. For comparison
S&P 500
and
Dow Jones Industrial Average
has fallen 12% and 9% respectively this year.
From an economic perspective, the quarter looks fine. QuantumScape spent about $ 39 million on capital expenditures in accordance with management guidelines. For the second quarter, the company expects to spend about $ 35 million to $ 65 million on capital expenditures, similar to first quarter expenditures.
There were no changes to the company’s expense plans for the entire year. QuantumScape still expects to spend about $ 325 million to $ 375 million on capital expenditures and about $ 225 million to $ 275 million on operating expenses. The company should have about $ 800 million in liquidity by 2023.
From an operational perspective, the company made progress. The company tested battery cells stacked with 16 layers, which achieved battery performance similar to their single-, four- and 10-layer cells. QuantumScape has to build its battery cells – which are a bit like a set of cards – layer by layer to prove that its technology can work inside a vehicle that will charge hundreds of times and travel tens of thousands of miles over its lifetime .
QuantumScape’s solid-state battery technology is years away from commercialization, but it’s promising. These batteries promise lower cost, better charging time, more safety and longer life than conventional lithium-ion batteries.
Still, with sales far out, investors are left with measuring the company against its milestones. Next for the company are cells with multiple layers and the construction of a pilot plant. The pilot plant, called QS-0, will help demonstrate that the cells can be scaled. According to the company, QS-0 was to send samples to car customers at some point in 2023.
Milestones are important for any business, but so are market conditions. At a time when interest rates are rising and inflation is raging, investors do not like to speculate.
Write to Al Root at allen.root@dowjones.com
