Why QuantumScape Stock Is Plummeting Today

On the heels of explosive gains this week, QuantumScape (NYSE: QS) stock is seeing a big sell-off on Friday. The company's share price was down 15.7% as of 3 p.m. ET.

QuantumScape's valuation is falling today as investors move to take profits following big gains kicked off by the announcement of major manufacturing progress earlier this week. Even with today's pullback, the stock is up roughly 50% over the last week of trading as of this writing.

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Investors pump the breaks on QuantumScape stock after a huge surge

QuantumScape announced on Tuesday that it had made big progress with its manufacturing process. The company's Cobra separator process has now entered early production stages. The technology is designed to allow for faster and more energy-efficient production and is said to be roughly 25 times better when it comes to heat-treatment speed. The setup is also much smaller than previous technologies, and the smaller footprint should help the company improve its production capabilities.

The Cobra news kicked off huge gains for the stock this week, but shares are taking a breather. Investors and analysts are seeing some valuation concerns following the recent rally and are selling shares to take profits.

What's next for QuantumScape?

Despite explosive gains this week, QuantumScape stock is still down roughly 95% from the lifetime high it hit after going public through a merger with a special purpose acquisition company (SPAC) in November 2020. While the stock has posted an impressive rally this week thanks to news about its Cobra separator technology, long-term investors are likely still looking at a binary outcome.

If the company's solid-state battery technologies deliver on their promise and wind up seeing meaningful adoption in the automotive market, the stock is poised to skyrocket. If the technology comes up short and fails to find a place in the market, shareholders will likely lose most of their investment.

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Keith Noonan 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.