Shares of QuantumScape (QS) are on the rise on Wednesday after the electric vehicle-battery startup said in a letter to investors that it was able to produce multilayer battery cells, a crucial hurdle in the development of its technology. Meanwhile, Soros Fund Management disclosed a $4.6B stake in QuantumScape.
MULTILAYER BATTERY CELLS, SOROS STAKE: In a letter to investors, Chief Executive Officer Jagdeep Singh said that QuantumScape was able to produce multilayer battery cells. "We are pleased to report for the first time that we have made 4-layer multilayer cells in the 30x30mm form factor, and we have now seen close to 800 cycles at 30°C with over 90% capacity retention at both C/3 and 1C rates – substantially similar to the single-layer cells we reported in December. We used 30x30mm cells, made from separators cut from our standard target commercial area separators, because it allowed us to effectively quadruple the number of test cells as we work to scale up our engineering line capacity," the executive explained. " While there is still a lot of work to be done and we could encounter new challenges as we increase our layer count, this is an incredibly important result, and we are excited to have this so early in the year."
Meanwhile, Soros Fund Management disclosed on Tuesday a $4.6B stake in QuantumScape as the investment firm raised its techs bets and exited its stake in sports betting company DraftKings (DKNG).
Q4 SHOWS PROGRESS: Morgan Stanley analyst Adam Jonas highlighted that QuantumScape's fourth quarter consumed $37M of cash flow, leaving the company with over $1B of liquidity. Further, 2021 guidance for $230M-$290M of operating expenses plus capital expenditures is expected to require no more than $60M of net cash consumption by QuantumScape, he added, pointing out that the company expects to finish 2021 with over $900M of net cash that should be sufficient to see the company through the start of production in 2024. Commenting on the successful testing of 4-layer multilayer cells in a 30x30mm form factor, the analyst argued that the next step is to test 8 to 10 layers by year-end and to deliver "dozens" of layers in a commercial form factor to customers. Jonas has an Overweight rating and a price target of $70 on QuantumScape shares.
'POSTER CHILD STOCK' FOR EV DEMAND STORY: In a research note to investors following the news, Wedbush analyst Daniel Ives called QuantumScape the "poster child stock" for the EV global demand story, with EV batteries front and center. QuantumScape is a pure play on next generation battery technology with breakthroughs in the EV battery front that could change the industry down the road given the innovation behind solid state batteries, he added. Further, Ives argued that the company's successful multiplayer cells as part of its pioneering EV battery R&D is "a major step forward on accomplishing the holy grail of EV battery technology in a solid-state form."
PRICE ACTION: In afternoon trading, shares of QuantumScape have gained over 17% to $59.36.