Should You Buy QuantumScape Stock When its Trading at Around $7?

QuantumScape Corp. QS remains one of the most closely followed names in the solid-state battery space. As a development-stage company, it offers significant long-term potential — but also meaningful uncertainty. With the stock trading around $7, the real question isn’t about this year’s revenue. It’s about execution.

At this level, QS sits squarely in a “prove it” phase. Investors aren’t looking for headlines; they’re looking for measurable manufacturing progress. That setup aligns with its Zacks Rank #3 (Hold). Unless a clear catalyst emerges, the stock is likely to move with broader market conditions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The key near-term focus is the ramp-up of the company’s Eagle Line, designed to produce QSE-5 cells for customer sampling. More importantly, Eagle is intended to serve as a production blueprint that future licensing partners can replicate. If the line demonstrates improving and repeatable output, investor confidence could build meaningfully.

The Bull Case: Capital-Light Commercialization

The constructive case for QS centers on its capital-light licensing strategy. Rather than building and funding massive battery factories itself, QuantumScape plans to license its technology to established manufacturers. The company aims to generate revenue through joint development payments, milestone-based funding, and eventually royalties tied to production volume.

This structure reduces capital intensity while preserving upside if the technology scales successfully.Compared to peers like Solid Power SLDP and SES AI SES, QuantumScape’s strategy is somewhat differentiated. SLDP is also pursuing a partnership-driven model, supplying solid-state battery materials and working closely with automotive partners like BMW and Ford. However, SLDP has focused more heavily on sulfide-based electrolyte development and pilot-scale production, positioning itself as a materials supplier rather than a pure licensing platform.

SES, meanwhile, is advancing hybrid lithium-metal battery technology and emphasizes AI-driven safety and performance monitoring. SES has made progress with automotive sampling and manufacturing facilities but remains early-stage in scaling commercial production.

Partnership with Volkswagen’s battery subsidiary, PowerCo, remains a key catalyst for QS stock. The collaboration includes up to $131 million in milestone payments related to the QSE-5 pilot line, following a prior $130 million licensing agreement. In addition, QuantumScape expanded its automotive footprint in 2025 by adding two major OEMs and strengthening ceramic separator partnerships with Murata and Corning.

Manufacturing improvements are another important pillar of the bull case. The company’s Cobra separator process is described as significantly faster and more compact than its earlier Raptor system, directly addressing scalability and cost hurdles. QS has also shipped QSE-5 cells to the Volkswagen Group and demonstrated performance in the Ducati V21L race bike, offering early real-world validation.

What to Watch in 2026

The biggest milestone ahead is the Eagle Line’s transition from installation to meaningful output ramp. Investors should focus less on announcements and more on operational metrics.

Key indicators include yield improvements, uptime, cycle time reductions, reliability metrics, and cost progress. Management has highlighted factors such as mean time between failures and mean time to repair — measurements that matter when shifting from pilot production to scalable manufacturing.

Progress in customer sampling across multiple OEMs will also be critical. Advancing development programs beyond a single partner would strengthen confidence that the technology can transfer and scale more broadly.

The Bear Case: Losses and Lumpy Cash Flows

The risks are straightforward. Monetization remains milestone-driven and inherently uneven. The company does not generate revenues yet.

Losses are expected to continue. Management guided an adjusted EBITDA loss of $250-$275 million in 2026, roughly in line with 2025 levels. Profitability is not part of the near-term story.

Capital expenditures add to the pressure. After spending $36.3 million in 2025, the company expects $40-$60 million in capex during 2026, largely tied to next-generation development. That investment may strengthen long-term competitiveness, but it arrives before meaningful royalty streams are established.

There is also execution risk outside the company’s direct control. Because QS relies on partners to fund and operate large-scale production facilities, industrialization timelines depend on external decisions and supply-chain ecosystems.

Valuation and Investor Takeaway

QuantumScape shares have been volatile, reflecting shifting sentiment around milestones. The stock trades at a much high forward sales multiple, underscoring that valuation is driven by future commercialization expectations rather than present earnings.

At $7, QS offers long-term optionality — but it remains an execution story. It’s better to watch for tangible manufacturing progress before jumping to buy the stock now.

The Zacks Consensus Estimate for 2026 and 2027 suggests that losses will narrow year over year.

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This article originally published on Zacks Investment Research (zacks.com).

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