QuantumScape initiated with a Reduce at HSBC

HSBC initiated coverage of QuantumScape with a Reduce rating and $4.70 price target. The analyst says the “age of disruption is underway” in the auto sector, with rising electric vehicle adoption, growing importance of software, and cost pressures affecting autos stocks. The firm believes stock valuations do not reflect cash flow outlooks for its Buy rated stocks. HSBC cites QuantumScape’s long path to commercialization, with significant operational and execution risks not priced in, for the Reduce rating.