Here's Why QuantumScape Stock Is a Buy Before April 23

QuantumScape (NYSE: QS) initially attracted a stampede of bulls when it went public by merging with a special purpose acquisition company (SPAC) on Nov. 27, 2020. The solid state battery maker's stock opened at $24.80 and surged to a record high of $131.67 less than a month later. At the time, it claimed it could commercialize its first batteries by 2024, and that its revenue would reach $14 million in 2024, $39 million in 2025, and $275 million in 2026.

But like many other SPAC-backed start-ups, QuantumScape missed its lofty goals by a mile. It still hasn't commercialized any of its batteries yet, and it doesn't expect to achieve that goal until 2026. As a result, it isn't generating any revenue as it racks up steep losses.

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That's why QuantumScape's stock now trades at less than $4. But with a market cap of $2.1 billion, a lot of growth is still baked into its valuation. It's also increased its number of outstanding shares by 57% since its public debut with its stock-based compensation and secondary offerings. All of those issues have made it an easy target for the bears.

Yet over the past three months, QuantumScape's insiders bought nearly 5 times as many shares as they sold. That warming insider sentiment suggests its volatile stock could finally bottom out in the near future. Let's review what happened to QuantumScape over the past year -- and why its stock might be worth buying ahead of its next earnings report on April 23.

What are the major catalysts for QuantumScape?

QuantumScape's solid-state lithium metal batteries generate electricity from solid electrolytes instead of the liquid electrolytes found in traditional lithium-ion batteries. That difference allows them to resist higher temperatures, last longer, and be charged more quickly. However, they're also much more expensive to produce than lithium-ion batteries. That's why they've only been mass-produced for smaller devices like wearables and pacemakers instead of electric vehicles.

QuantumScape wants to buck that trend and reach the EV market with its QSE-5 batteries, which have an energy density of more than 800 Wh/L (watt hours per liter) and can be rapidly charged from 10% to 80% in less than 15 minutes. By comparison, traditional lithium-ion EV batteries have an average density of 300 to 700 Wh/L with an average fast-charging time of 20 minutes to an hour.

That plan sounds ambitious, but QuantumScape is firmly backed by Volkswagen (OTC: VWAP.Y), which has co-developed those batteries with the company over the past decade. Volkswagen even launched a new group, PowerCo, to start testing QuantumScape's prototype batteries in 2022.

QuantumScape finally started shipping the first samples of its QSE-5 batteries to automakers in the second half of 2024. It plans to keep shipping more test samples this year as it transitions from its current Raptor separator process to its newer Cobra separator process. It expects that upgrade to boost its cell reliability, yields, and equipment productivity -- and those improvements could pave the way toward the mass production and commercialization of its batteries in 2026 and beyond.

What are the major challenges for QuantumScape?

QuantumScape's near-term plans sound promising, but the Trump administration's unpredictable tariffs could still disrupt its supply chain, spike its component prices, and throttle the growth of the entire EV market. Other major automakers, including Toyota Motor and Nio, are also making progress toward mass-producing their own solid-state batteries.

Those challenges could force QuantumScape to postpone the commercialization of its batteries again and rack up even steeper losses. That's probably why 15% of its floating shares were still being shorted at the end of March. But on the bright side, that elevated short interest could set it up for a minor short squeeze if it posts a stronger-than-expected earnings report on Wednesday, April 23.

Why QuantumScape might be worth buying before its next earnings report

For 2025, analysts don't expect QuantumScape to generate any revenue as it racks up a net loss of $464.4 million. For 2026, they expect it to generate just $3.5 million in revenue as it slightly narrows its net loss to $426.5 million. In other words, Wall Street has set the bar so low that any bright spots in its earnings report -- such as a limited impact from the Trump administration's tariffs, more licensing deals, and the increased production of its QSE-5 samples -- could drive its stock higher.

QuantumScape is still an extremely speculative stock, and it would be reckless to go all-in at these levels before more green shoots appear. But if you believe it can successfully upgrade its separator process this year and commercialize its first batteries by 2026, it might be a good idea to nibble on the stock before it posts its next earnings report.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.