Beware QS Stock! Why QuantumScape Is a ‘Hard Pass.’

Stocks to sell

For brief periods of time, stock traders will get excited about electric vehicle battery technology company QuantumScape (NYSE:QS). Don’t get caught in a trap, though. As QuantumScape’s battery-market rivals relentlessly move forward, QS stock remains vulnerable to a pullback even if it catches a bid from time to time.

Here’s an example. Previously, QuantumScape stock rallied when short-term traders cheered Tesla’s (NASDAQ:TSLA) EV delivery numbers.

However, despite transitory catalysts like this, the long-term story for QuantumScape hasn’t really changed. And, that story probably won’t have a happy ending for the company and its shareholders.

Cramer: ‘There’s Nothing There’ With QS Stock

Mad Money host Jim Cramer is known to be quick and quirky during his popular “Lightning Round” segment. I must admit, though, that his dismissive comment about QuantumScape stock took me by surprise.

“Oh, no. Hard pass, there’s nothing there,” was what Cramer had to say recently about QS stock.

This dismissive commentary runs counter to the outlook of many QuantumScape bulls, who may view the company as a visionary solid-state battery startup.

However, Cramer isn’t the only Wall Street expert with a bearish stance on QuantumScape stock. Not long ago, analysts with TD Cowen downgraded their rating on the stock to from “outperform” to “market perform,” and drastically reduced their price target on QuantumScape shares from $14 to just $8.

These are harsh assessments, but I can’t really argue with them. QuantumScape is, to put it politely, a “non-profit” business (and not in the charitable sense of the term).

Plus, over the long term, QuantumScape’s loyal shareholders have lost a lot of value in their investments.

QuantumScape Has Ambitious Rivals

QuantumScape definitely isn’t the only publicly listed company developing solid-state EV batteries. I’ve previously reported on Toyota Motor’s (NYSE:TM) ongoing efforts to advance solid-state batteries for battery-electric vehicles.

Toyota ambitiously aims to “halve” the size, weight and price of currently available solid-state EV batteries.

QuantumScape has to deal with competition from Nissan Motor (OTCMKTS:NSANY).

That company is reportedly preparing its factory in Yokohama, Japan, to begin pilot production of solid-state EV batteries as soon as next year.

Then, there are smaller but no less ambitious startups like Factorial Energy. That company has already garnered interest from multiple automakers as Factorial Energy seeks to roll out solid-state EV batteries in the coming years.

QuantumScape Gets a ‘Hard Pass’ in 2023

Cramer’s assessment is harsh but honest, and I can’t disagree with it. QuantumScape stock is definitely a “hard pass” as the company faces fierce competition and remains consistently unprofitable.

I’ve recommended TM stock as a better alternative to QS stock if you’re seeking exposure to the solid-state EV battery market. I’m sticking to that stance, and while I’m not as blunt as Cramer, I certainly don’t recommend investing in QuantumScape.

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 InvestorPlace.com 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) InvestorPlace.com. 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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