Why Did QuantumScape Stock Crash This Week?
Key Points
This week's sell-off in QuantumScape shares comes after the stock has more than tripled in recent months.
QuantumScape's market could be huge if its EV battery technology is adopted.
A safer, more efficient, faster-charging battery would be appealing to potential EV buyers.
- 10 stocks we like better than QuantumScape ›
QuantumScape (NYSE: QS) took a breather this week after shares of the electric vehicle (EV) battery maker more than tripled over the last six months. The stock has declined nearly 16% since market close last Friday, according to data provided by S&P Global Market Intelligence.
After such a strong rally, existing shareholders may wonder if it's time to worry or cash out. Here's a look at what may be driving this week's sell-off.
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QuantumScape: Buy or sell?
Investors scooped up shares of QuantumScape in recent months as the company announced several new steps toward commercializing its solid-state EV battery technology. It expanded a collaboration with Volkswagen's battery unit, inked a deal with glassmaker Corning for ceramic separator development and production, and has shipped samples to potential automotive customers for testing.
At least one important insider took advantage of the stock's run higher and sold shares, though. Director J. B. Straubel executed an option exercise, selling more than 150,000 shares on Nov. 5. Or it seemed that way, at least.
But while Straubel's sales seemed well-timed as the stock hovered near $17 per share, it was, in fact, part of a prearranged share sale plan. The QuantumScape director still directly holds almost 300,000 shares.
This week's plunge wasn't directly related to any QuantumScape news. It appears to have been caught up in a broader sell-off of high-tech, high-risk stocks. The company is nearing the commercialization of a technology that promises a safer, faster-charging, higher-density EV battery.
While it remains a risky stock, investors who can afford to wait and see if QuantumScape's technology is adopted as the EV standard may do well to hold on or even add to their position on this week's dip.
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Howard Smith has positions in QuantumScape. The Motley Fool has positions in and recommends Corning. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.
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