QS Stock: What Caused QuantumScape’s Greater-Than-Expected Losses for Q2?

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Shares of QuantumScape (NYSE:QS) stock are taking a tumble after the solid-state battery (SSB) company reported its second-quarter earnings.

During the quarter, QuantumScape generated $0 in revenue, as expected. Furthermore, the company’s net loss increased to $122.95 million compared to a loss of $116.50 million a year ago. Its GAAP EPS loss was 25 cents, falling short of the analyst estimate for a loss of 22 cents and improving from a loss of 26 cents year-over-year (YOY).

The company’s EPS miss was due to several factors. First, an investment in QS stock plays on the company’s long-term prospects, as it currently does not have any product on the market. In the meantime, QuantumScape is spending heavily on research and development. These expenses totaled $97.74 million compared to $86.45 million YOY.

QuantumScape must also spend money on fixed assets, like equipment, that will support battery development. Capital expenditures totaled $18.9 million.

“Q2 capex primarily supported equipment purchases for low-volume QSE-5 prototype production, as well as the Cobra process and other equipment as we prepare for higher-volume QSE-5 prototype production in 2025,” said the company.

QS Stock: QuantumScape Reports Earnings, Falls Short of EPS Estimate

QuantumScape has guided for 2024 capital expenditures between $70 and $120 million and expects to be on the lower end of those figures. It has also forecast its 2024 adjusted EBITDA loss to be between $250 and $300 million.

In addition, the company expects its cash on hand to sustain operations until 2028, an increase of 18 months compared to its last update. As of June 30, QuantumScape had $938 million in liquidity, which was reassuring for shareholders who may have expected equity offerings.

Earlier this month, QuantumScape announced that it had partnered with PowerCo, a subsidiary of Volkswagen (OTCMKTS:VWAGY), to mass-produce batteries. The partnership hinges on QuantumScape achieving “satisfactory technical progress and certain royalty payments.” QuantumScape praised the partnership in its earnings and believes that it will make it more capital-efficient while bringing its battery to the market faster.

So, when will QuantumScape become profitable? Shareholders will have to be patient, as analysts expect that it will report its first year of positive EPS in 2030.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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