Duck and Cover! A St. Valentine’s Day Massacre Is Coming for QuantumScape Stock

If you’re invested in electric vehicle (EV) battery technology company QuantumScape (NYSE:QS), you’ll definitely want to mark your calendar. There’s a major event coming very soon, and depending on the outcome, it could change the QS stock forecast dramatically. So, unless you’re just a gambler, there’s no need to take a huge risk and buy QuantumScape shares now.

Furthermore, QuantumScape’s partnership with a well-known automaker might not be as firm as previously assumed. All in all, the bullish argument for QuantumScape stock in 2024 just doesn’t hold up under scrutiny. 

A Big, Scary Day Is Coming for QS Stock

Frankly, QuantumScape has a very poor quarterly EPS track record. Nearly every time, QuantumScape has fallen short of Wall Street’s per-share earnings forecasts.

This track record of EPS misses includes QuantumScape’s most recent three quarterly reports. In the company’s most recently published report, analysts expected QuantumScape to have posted an earnings loss of 19 cents per share. However, QuantumScape actually ended up losing 23 cents per share.

This helps to explain why QuantumScape stock, despite its high level of volatility, basically went nowhere in 2023. QuantumScape is a consistently unprofitable company that can’t seem to live up to Wall Street’s already-modest expectations.

That might have been fine during the highly speculative, low-interest-rate environment of 2021. 2024 is quite different from 2021, however. In any case, Wall Street now expects QuantumScape to report a fourth-quarter 2023 earnings loss of 19 cents per share — just like analysts had expected in the previous quarter, and QuantumScape missed the mark.

So, mark your calendar for St. Valentine’s Day, Feb. 14. That’s when QuantumScape will release its Q4 2023 financial results. That’s a day to watch the event from the sidelines, but not to place any risky bets on a company with a terrible earnings track record.

Is QuantumScape’s Crucial Partnership in Jeopardy?

One of the main pillars of the bull case for QS stock is that QuantumScape has a strategic partnership with Volkswagen (OTCMKTS:VWAGY). I really like InvestorPlace contributor Thomas Niel’s summary of how important this partnership is:

“[It’s] perceived to be a massive positive in the corner of QS stock. Although the EV battery technology company remains in the pre-revenue stage, and keeps burning through hundreds of millions each year, those bullish on the stock believe it will all be worth it in the end.”

Would it be an exaggeration to say that the company’s strategic partnership with Volkswagen is make-or-break for QuantumScape? I don’t think so. However, a recent report from Reuters casts doubt on the strength of this partnership.

As the report points out, the Volkswagen-QuantumScape collaboration “has been dogged by delays.” So, is Volkswagen looking beyond QuantumScape and considering other partners?

The Reuters report does, indeed, suggest that Volkswagen is “casting its net wider.” According to a “source with direct knowledge of the discussions,” Volkswagen is “holding talks” with France-based battery-technology company Blue Solutions.

I can’t confirm that the Volkswagen-QuantumScape strategic partnership is about to collapse. Still, it’s alarming to consider how important this partnership is to QuantumScape. It’s not a good thing when a startup company relies heavily on one partnership — and it’s even worse if that collaboration might not be as firm as previously assumed.

QuantumScape Stock Forecast: Get Out Before Feb. 14

My QS stock forecast has been bearish for a while. Now, with a worrisome earnings event coming up on Feb. 14, the forecast is unclear but still pessimistic.

Besides, it’s troubling that the bull case for QuantumScape stock relies heavily on a collaboration with Volkswagen, which might be in jeopardy. Therefore, if you’re considering investing in QuantumScape before Feb. 14, I urge you to cease, desist and just stay out of the trade.             

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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