QuantumScape Q3 Earnings Preview: Cash Runway, Partnerships And Production Updates

QuantumScape Corp QS shares are trading lower by 3.49% to $5.11 during Wednesday’s session. Traders and investors are watching for the company’s third quarter earnings report, confirmed for Wednesday’s after hours session.

What To Watch For: QuantumScape, a leader in solid-state lithium battery technology, is set to release its third-quarter earnings tomorrow, following a mixed second quarter performance.

The company’s battery technology aims to revolutionize the electric vehicle (EV) industry by providing faster-charging, longer-lasting batteries compared to traditional lithium-ion cells.

In its second-quarter results, QuantumScape posted a GAAP loss of 25 cents per share, slightly wider than analysts' expectations, which had projected a 23 cents per share loss. The increased losses reflect the company’s aggressive investments in R&D and scaling its production capabilities.

QuantumScape's third-quarter performance could show continued operational losses as the company remains focused on advancing its QSE-5 solid-state battery prototype. However, investors will be looking for signs that QuantumScape is controlling expenses while hitting key development goals.

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In the second quarter, QuantumScape revealed capital expenditures of $18.9 million, mainly directed toward equipment purchases for low-volume QSE-5 prototype production, an important step toward its goal of higher-volume manufacturing by 2025.

This level of spending is expected to persist in Q3, as QuantumScape continues to prepare for larger-scale production. The QSE-5 prototype holds tremendous potential as it addresses key industry pain points such as battery longevity and charging speed, but translating this technology to mass production remains a significant challenge.

What Else: One of the major highlights from the second quarter was the company's strategic licensing agreement with PowerCo, a subsidiary of Volkswagen, which provides QuantumScape with a capital-efficient route to market.

As part of the deal, QuantumScape benefits from PowerCo's development resources and will avoid certain capital expenditures, including a planned $134 million investment into a joint venture, freeing up resources for further innovation and expansion.

This partnership may emerge as a key theme in the third quarter earnings call, as it underpins QuantumScape's revised cash runway, now projected to extend into 2028. This extended runway should offer the company more breathing room as it navigates the final stages of development and commercialization.

QuantumScape ended the second quarter with $938 million in liquidity, a strong position that gives the company flexibility to continue investing in its groundbreaking technology. Analysts and investors will be watching closely to see if QuantumScape’s cash position remains robust in the third quarter, particularly given the capital-intensive nature of battery production.

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The company’s ability to balance its liquidity needs with R&D expenditures will be critical to ensuring it can meet its long-term goals without the need for dilutive financing measures.

What’s Next: Looking ahead, QuantumScape maintained its full-year 2024 guidance, forecasting an adjusted EBITDA loss between $250 million and $300 million. Additionally, the company expects to come in at the lower end of its capital expenditure guidance range of $70 million to $120 million.

As QuantumScape prepares for mass production in 2025, Wednesday’s third quarter earnings report could provide important updates on its production timeline, strategic partnerships and financial outlook.

Read Also: A Preview Of QuantumScape’s Earnings

How To Buy QS Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in QuantumScape’s case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, QS has a 52-week high of $10.03 and a 52-week low of $4.67.