To The Moon

US stocks notched fresh highs last Friday amid a record-setting rally as the US and China advanced trade talks and the "Magnificent Seven" tech stocks continued to climb. All three major indexes hit all-time highs for a second session in a row, ending the week on an upbeat note as the dust settled on the Federal Reserve's return to interest rate cuts.

The best-performing concepts is Solid State Battery. Considering the different perceptions of the stock, this time TigerPicks chose $Quantumscape Corp.(QS)$ to have a fundamental highlight to help users understand it better.

In the past five days, QS's share price has risen by 34.86%, surging by 158.56% compared with the same period last year.

$Quantumscape Corp.(QS)$

QuantumScape Corporation is developing solid-state lithium-metal battery technology for electric vehicles (EVs) and other applications. The Company’s solid-state lithium-metal battery technology is designed to offer energy density, faster charging, and enhanced safety. The Company's solid-state battery technology has applicability in other markets, including stationary storage and consumer electronics, such as smartphones and wearables, among others.

QuantumScape's solid-state batteries hold the potential to jolt awake a moribund market for EVs in the U.S. after policy developments from Trump's drill, baby, drill mantra look set to reverse EV adoption momentum. The systematic rollback of EV emissions rules and purchase incentives has sparked a gasoline revival for the traditional automakers.

Detroit is dusting off previously shelved CapEx plans for new gas-powered models or dropping targets to move to fully electric lineups. The landmark One Big Beautiful Bill (OBBBA) removed Biden's $7,500 EV purchase tax credit. It also ended fines for automakers who miss fuel-economy targets, mitigating the need to spend billions of dollars in regulatory credits.

This had formed a critical incentive for automakers to ramp up the production of new EV models and had formed $Tesla Motors(TSLA)$ most profitable business line. Hence, EVs will need to better compete with gas cars on technology, and solid-state batteries will be a key part of this competition.

QuantumScape July Battery Energy Density

However, QuantumScape at its current valuation reflects far too much euphoria in a market that could be set to be significantly more truncated on the back of the OBBBA. The international market also faces some headwinds with Chinese EVs, primarily built on CATL batteries, taking up an increasingly larger amount of EV sales. Chinese brands formed 5.1% of new vehicle registrations across 28 European countries for the first half of 2025, 2x the market share a year ago.

To be clear, I see it as unlikely that these brands would use a QS battery. QuantumScape wants to replace conventional lithium-ion batteries with its non-combustible, anode-free lithium-metal batteries. These have materially enhanced energy density, meaning greater range for EVs, faster charging, and a safety profile that has eluded traditional combustible lithium-ion batteries. QS batteries would be faster charging than all of TSLA's current models, including those of $Rivian Automotive, Inc.(RIVN)$ and $Porsche Automobile Holding SE(POAHY)$ .

Valuation, Free Cash Flow, And Liquidity

QuantumScape Roadmap

Bulls have hinged their investment on the broader landscape for EVs in aggregate with perceived operational momentum and manufacturer engagement with its batteries. The company's roadmap places the launch of its first commercial product, the QSE-5, in 2026. This will have a less than 15-minute fast charge and an energy density of 844 Wh/L, beyond the density of current market options.

QuantumScape Planned First Commercial Product

The first commercial product is via $Volkswagen AG(VWAGY)$ PowerCo SE and could see QuantumScape's batteries used in the technology stack of a Ducati motorcycle. The launch of the product would represent a mini-inflection point, as it would form one of the first anode-free solid-state batteries to be used in a commercial real-world setting. Volkswagen premiered the future product at a September press conference in Munich. When the motorcycle will launch is still in the air, with downstream sales unlikely to be material when considered against QuantumScape's current market cap.

QuantumScape and Ducati motorcycle

QuantumScape versus competitors

QS also places its batteries ahead of the competition, with the space an intensely crowded field of established companies like $Samsung Electronics Co., Ltd.(SSNLF)$ and startups like $SES AI Corp(SES)$ and Factorial Energy. The key metrics to monitor for QS in lieu of revenue will be free cash flow (FCF) and short-term liquidity. FCF came in at negative $70.1 million during the second quarter, with the company's cash and cash equivalents at $800 million. Liquidity has dipped by 15% over QuantumScape's year-ago comp and was down by $63 million sequentially.

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Critically, QuantumScape's current liquidity position means a multi-year cash run rate at its current rate of burn. The company has stated that the current liquidity balance, in aggregate with additional payments being made by PowerCo through the expansion of its existing licensing agreement, should provide a cash runway far into 2029. The PowerCo team-up would see QS receive up to $131 million over the next two years.

Conclusion

QuantumScape's lofty valuation reflects the promise of solid-state batteries to materially advance the adoption of EVs, especially in a new reality where tax incentives have been stripped away and there is no regulatory stick to force the traditional automakers to pursue new EV models. In my opinion, QS currently sits purely in the realm of speculation, with a significant level of medium- to long-term operational momentum already baked into the current stock price. However, the company has built a formidable level of liquidity, hedging the need for selling new equity in the short term and providing a boost for bulls. QS is a hold.

Stock Price Forecast:

Here are the target price forecasts for the next 12 months from analysts.

Based on 4 Wall Street analysts offering 12 month price targets for QuantumScape in the last 3 months. The average price target is $7.33 with a high forecast of $11.00 and a low forecast of $3.00. The average price target represents a -45.38% change from the last price of $13.42.

Resource:

https://seekingalpha.com/article/4822090-opendoor-dont-let-a-good-crisis-go-to-waste

https://seekingalpha.com/article/4821562-opendoor-not-chasing-the-rally-not-shorting-the-squeeze

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