QuantumScape Corporation (NYSE:QS) and its position in the battery market should have set it up for success. However, that’s not proving to be the case in its share price. The company is down substantially in Wednesday afternoon trading after a downward shift in rating from Goldman Sachs.
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Goldman Sachs, by way of analyst Mark Delaney, lowered QuantumScape’s rating from its original “neutral” to a full-on Sell. Basically, the word from Delaney and the rest of the team featured two key problems.
One, it’s not even immediately clear if the company’s technology is commercially ready. Two, if the technology is actually ready, trying to get it into wide-scale production would put a serious crimp into free cash flow. That left Delaney not only cutting the rating but also cutting the price target down from its original $8 per share to merely $5.
Certainly, batteries are now more valuable than ever, but QuantumScape, which is still in the “pre-revenue” stage, won’t be a player in this market for some time to come. In fact, current projections suggest that it may be another two years—and a big pile of cash—before it reaches that point.
Analysts across the broader body are also uncertain about QuantumScape’s chances. The consensus opinion currently considers QuantumScape a Moderate Sell, with no buy recommendations at all. With an average price target of $7.24 per share, QuantumScape has 9.43% upside potential.
