QuantumScape (QS): Why you should stay away

QuantumScape (QS) is an American company that produces lithium-ion batteries that are used in electric cars. The company is headquartered in San Jose, California and employs around 200 people. Investors include Microsoft (MSFT) Co-founder Bill Gates and Volkswagen (VWAGY) with Tesla (TSLA) former Chief Technology Officer JB Straubel as a board member.

The company just recently went public via SPAC merger with Kensington Capital Acquisition Corp and is expected to trade under ticker symbol QS on Monday.

QuantumScape (QS) is clearly doing something different

After all, the company has backing from none other than Bill Gates, who said that QuantumScape has resolved lithium’s problems.

On top of that, German automotive giant Volkswagen has invested $300 million in QuantumScape. This includes a $200 million investment in 2020.

What really sets QuantumScape’s state-of-the-art battery apart is that, according to the company, this battery could potentially increase the distance electric vehicles can travel on a single charge by 50%.

Powered by QuantumScape’s batteries, Volkswagen’s electric vehicle offerings could set the standard for the industry. If that pans out, then other automakers could come calling as QuantumScape’s batteries would be a red-hot commodity.

Stay away from QS stock for now

Although it sounds great to invest in a company backed by famous business leaders, I think that QS is overvalued. If you would like to pay extra for the shares then by no means, please do, but the company has not even started making the batteries yet. So there is no revenue.

In fact, production of the batteries is several years away with Volkswagen aiming to install them in vehicles by 2025.

As an investment, QS stock is really still in the early innings. It will take some time for QuantumScape’s ambitious vision to come to fruition.

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Jay Lorrence
Jay Lorrence

Investor of 12 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.

Articles: 233

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