QuantumScape(NYSE: QS), a developer of solid-state lithium metal batteries, initially dazzled investors after its public debut in November 2020. It went public by merging with a special purpose acquisition company (SPAC), and its stock opened at $24.80 on the primary day before surging to an all-time high of $131.67 a month later.
But today, QuantumScape stock trades at about $5. It lost its luster as investors realized that it might take years for the corporate to commercialize its batteries and generate meaningful revenue, while rising rates of interest highlighted its ugly losses.
Yet QuantumScape remains to be a divisive stock. The bulls imagine it’s going to soar again because it finally ramps up its business shipments, however the bears expect it to be crushed by the competition before that happens. So where could its stock find yourself in a decade?
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In response to Straits Research, the solid-state battery market could grow at a compound annual growth rate (CAGR) of 36.4% from 2024 to 2032 as they’re used in additional electric vehicles, portable electronics, wearables, medical devices, and energy harvesting tools. As an early mover in solid-state batteries, QuantumScape could make the most of that secular expansion.
Solid-state lithium-metal batteries are less volatile, more heat resistant, and charge more quickly than traditional lithium-ion batteries. But they’re also more difficult to engineer and costlier to supply. They’re currently utilized in wearables, pacemakers, and smaller devices, but they have not been mass-produced for EVs yet.
QuantumScape desires to disrupt the EV market with its QSE-5 batteries, which have an energy density of over 800 Wh/L (watt-hours per liter) and could be quick-charged from 10% to 80% in lower than quarter-hour. By comparison, most lithium-ion batteries for EVs have a median density of 300-700 Wh/L, and so they need 20 minutes to an hour to be quick-charged to 80%.
QuantumScape can be backed by Volkswagen(OTC: VWAP.Y). The German automaker has been co-developing those batteries with QuantumScape for greater than a decade, and it even established a recent group, PowerCo, to road-test its prototype batteries in 2022. That support could help QuantumScape finally scale up its business and commercialize its first batteries.
To perform that ambitious goal, QuantumScape is transitioning from its current Raptor separator process to its more advanced Cobra separator process this yr. That upgrade should improve its cell reliability and production yields. It also began to ship the primary samples of its QSE-5 batteries to pick out automakers within the third quarter of 2024.
But with an enterprise value of $2.1 billion, a variety of QuantumScape’s future growth remains to be baked into its stock. Analysts don’t expect it to generate any revenue in 2025, and so they only expect it to generate $7 million in revenue in 2026.
In its pre-merger presentation, QuantumScape claimed it could commercialize its first batteries in 2024, generate $14 million in revenue that yr, and grow its top line at a CAGR of 363% over the next 4 years to $6.4 billion by 2028.
It’s already missed that commercialization goal by two years. But when it achieves its first full yr of business shipments in 2027, generates $14 million in revenue that yr, and follows its original outlook, it’d just generate $6.4 billion in revenue by 2031. If QuantumScape hits that focus on and grows its revenue at a CAGR of 30% over the next 4 years (which could be comparable to Straits Research’s forecast for the broader market), it could generate $18.5 billion in revenue by 2035.
If that happens and it trades at a more reasonable 10 times sales by then, it might be value $185 billion — which might represent an 88-bagger gain in only a decade. That may be possible if it scales up its business, Volkswagen installs its batteries in its own EVs, and other EV makers follow that lead.
Nevertheless, investors must also do not forget that it faces stiff competition from similar start-ups like Blue Solutions in addition to big automakers like Toyota and Nio within the solid-state battery race. If those rivals scale up their businesses before QuantumScape, they may emerge because the leaders of this budding market.
QuantumScape won’t go bankrupt anytime soon. It claims to have enough money to last through not less than 2028, and it’s still firmly supported by Volkswagen. So assuming it sticks with its roadmap and avoids any more delays, it could grow like a weed over the subsequent decade. It could also eventually be acquired by Volkswagen.
If that happens, it could generate some massive multibagger gains over the subsequent decade. But when it breaks its guarantees again, its stock could drop even lower. So for now, it’s still a speculative play that you must only buy with money you may afford to lose.
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