Should You Buy QuantumScape Stock While It's Below $7?

QuantumScape (NYSE: QS), a developer of solid-state batteries, took its investors on a wild ride over the past year. Its stock reached a 52-week high of $9.52 per share on July 17, 2024, but sank 64% to a 52-week low of $3.40 on April 8, 2025. It then nearly doubled to its current price of $6.72 (as of this writing) over the following three months.

QuantumScape's stock is so volatile because it hasn't commercialized any of its batteries or generated any revenue yet. The bulls expect its sales to soar once its batteries hit the market, but the bears don't think its business model is sustainable.

Image source: Getty Images.

Wall Street's analysts are just as divided. Of the nine analysts who cover QuantumScape's stock, six rate it as a hold, one rates it as a buy, and two rate it as a sell. Its price targets range from $2.50 to $8. We should take those estimates with a grain of salt, but should you buy QuantumScape as it approaches those top price targets?

Why is QuantumScape a divisive stock?

QuantumScape's solid-state lithium metal batteries run on solid electrolytes instead of the liquid electrolytes used in lithium-ion batteries. That difference gives them better thermal resistance, shorter charging times, and higher charging capacities, but they're also more difficult and expensive to manufacture.

That's why solid-state batteries are still mainly used in smaller devices like wearables, pacemakers, and Internet of Things (IoT) gadgets instead of consumer electronics or electric vehicles (EVs). But over the past decade, QuantumScape has been working with its top investor, Volkswagen (OTC: VWAP.Y), to commercialize its solid-state batteries for EVs.

QuantumScape's first QSE-5 battery has an energy density of over 800 Wh/L (watt hours per liter) and can be fast charged from 10% to 80% in under 15 minutes. For reference, the lithium-ion batteries used in most EVs only have an average density of 300-700 Wh/L with an average fast charging time of 20 minutes to an hour.

Last year, Volkswagen's road tests (through its PowerCo division) found that its QSE-5 batteries retained over 95% of their energy capacity after 1,000 charging cycles, compared to the industry standard for an 80% capacity after 700 charging cycles. Therefore, an EV using QSE-5 could drive over 300,000 miles without any noticeable loss in range.

That technology sounds impressive, but many other companies -- including automakers like Toyota Motor (NYSE: TM) and other start-ups like Blue Solutions -- are developing similar solid-state batteries. If those competitors commercialize their batteries first, QuantumScape could become irrelevant before it even scales up its business.

Before QuantumScape went public by merging with a special purpose acquisition company (SPAC) in late 2020, it claimed it could commercialize its first batteries by 2024. But as of this writing, it doesn't expect that to happen until 2026.

All eyes on Cobra

QuantumScape's biggest near-term catalyst will be its transition from its older Raptor ceramic separator process to its newer Cobra process. Cobra will provide a 25-fold upgrade to its heat treatment speed while only occupying a "fraction" of its physical space per film start.

That upgrade should boost its equipment productivity, cell reliability, and overall yields, which should pave the way toward its first field tests and commercial shipments in 2026. To accelerate its transition from Raptor to Cobra, it partnered with Murata this April to ramp up its production of the ceramic film used in its separators.

On June 24, QuantumScape's stock soared 35% after it announced that its Cobra process had started its baseline production for higher-volume QSE-5 samples. CEO Siva Sivaram said that milestone gave it a "powerful path forward for commercializing" its solid-state batteries.

Its licensing model could boost its margins

QuantumScape doesn't plan to mass-produce its own batteries. Instead, it will license its technology to automakers and dedicated battery makers like PowerCo. By generating higher-margin licensing fees and royalties through that capital-light model, it aims to gradually narrow its net losses.

In 2026, analysts expect QuantumScape to generate $4.5 million in revenue with a net loss of $429.9 million as it commercializes its first batteries. In 2027, they expect its revenue to surge to $60.1 million as it narrows its net loss to $370.9 million. Its market cap of $3.7 billion might seem frothy, but its core market could grow a lot larger over the next decade. With $860.3 million in cash, cash equivalents, and marketable securities in its latest quarter, QuantumScape won't go bankrupt anytime soon. That easily offsets its $150.3 million in total liabilities (including $93.5 million in total debt), but it's also increased its number of shares by over 60% with its secondary offerings and stock-based compensation since its public debut. That dilution could continue for the foreseeable future.

Should you buy QuantumScape's stock today?

QuantumScape will remain a volatile stock until the company generates stable revenue. It shouldn't be a core holding in your portfolio, but it might still be worth nibbling on at these levels if you expect it to become a major player in the nascent solid-state battery market.

Should you invest $1,000 in QuantumScape right now?

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.