Prediction: QuantumScape (QS) Stock Is a Buy Before April 22

QuantumScape (NASDAQ: QS), a developer of solid-state batteries for electric vehicles, has shed about 40% of its market value this year. It also trades 95% below its all-time high.

QuantumScape's solid-state batteries provide better thermal stability, shorter charging times, and higher charging capacities than lithium-ion batteries, which use liquid electrolytes. That technology sounds promising, but the company hasn't commercialized any of its products yet.

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QuantumScape's lack of meaningful revenue, steep losses, and high valuation spooked the bulls, and its shares crumbled as the macro headwinds drove investors toward safer stocks. But if you can stomach the near-term volatility, it might be smart to nibble on QuantumScape's stock before the company posts its second quarter earnings report on April 22.

What happened to QuantumScape over the past few years?

QuantumScape's QSE-5 battery, which it's co-developing with Volkswagen (OTC:VWAP.Y), has an energy density of 844 Wh/L (watt hours per liter) and can be rapidly charged from 10% to 80% in less than 15 minutes. Most lithium-ion batteries for EVs only have an average energy density of 300-700 Wh/L with a fast-charging time of 20 minutes to an hour.

QuantumScape originally planned to manufacture these batteries through a joint venture with Volkswagen, but it pivoted toward a less capital-intensive licensing model in 2024. It plans to license its battery technology to Volkswagen's battery subsidiary, PowerCo, and other automakers to generate a steady stream of higher-margin royalty and licensing revenues.

Over the past year, QuantumScape upgraded its older Raptor separator process to its newer Cobra process. That upgrade -- which improves its cell reliability, equipment productivity, and yields -- enables it to produce more samples for Volkswagen and other potential customers.

Why could QuantumScape be a buy before its next earnings report?

From 2026 to 2028, analysts expect QuantumScape's revenue to rise from less than $1 million to $544.5 million as it finally commercializes and licenses its first QSE-5 batteries. With a market cap of $3.86 billion, it looks reasonably valued at seven times its 2028 sales.

Therefore, if QuantumScape provides clearer updates regarding its B-sample (near-production testing cell) shipments, its Eagle Line pilot production line (for producing higher-volume samples), and new OEM partnerships during its next earnings call, its stock could rally. It could also reaffirm its previous expectation that its cash runway -- buoyed by Volkswagen's milestone payments -- will last through 2029, giving it enough time to scale its licensing business.

Nearly a fifth of QuantumScape's float was being shorted as of March 13. That percentage has likely risen over the past month as the macro headwinds intensified -- so any positive news might spark a short squeeze and drive its stock higher. QuantumScape is still a speculative stock, but I believe its long-term potential could outweigh its near-term risks.

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