Stocks to buy

From a financial standpoint, electric vehicle (EV) battery technology company QuantumScape (NYSE:QS) isn’t perfect. On the other hand, QS stock has room to run because of QuantumScape’s proprietary “forever battery” technology. Investors will need to be patient and willing to tolerate a lot of risk, but I encourage you to hold your QuantumScape stock position until 2025.

EV industry expert Sandy Munro once declared that solid-state batteries will be the “the kiss of death for gasoline and diesel.” That’s a bold statement, but if Munro’s prediction is spot-on, you’ll regret it if you didn’t invest early in QuantumScape.

This doesn’t mean your stake in QuantumScape will explode to the upside next week or next month. The best strategy is to learn as much as you can about QuantumScape, and then just buy a few shares if you like the company’s reward-to-risk profile.

How High Could QS Stock Go?

QS stock has a 52-week high of $16.51, but it has been much higher than that. As you may recall, the QuantumScape share price nearly hit $40 in 2021, and even exceeded $100 in 2020.

Investors can shoot for the moon, but they still need to be realistic. After all, as the old market saying goes, there are bulls and there are bears, but pigs get slaughtered. Therefore, $20 by 2025 is a reasonable objective for QuantumScape stock.

I chose the year 2025 for a reason. As Eddie Pan reported, “CEO Jagdeep Singh previously forecasted that QuantumScape’s solid-state battery (SSB) would be released ‘by roughly the middle of the decade.’” If anybody would be able to predict the time frame for this, it’s QuantumScape’s chief executive. So, 2025 is as good a target year as any.

Don’t Expect Near-Term Profitability From QuantumScape

Without saying it directly, QuantumScape’s management made it crystal-clear in the company’s first-quarter 2023 shareholder letter that the company isn’t moving quickly toward profitability. From the year-earlier quarter to Q1 2023, QuantumScape’s operating expenses increased and so did the company’s net earnings loss.

In other words, don’t bother applying valuation metrics like trailing price-to-earnings (P/E) ratio to QuantumScape. This is a high-risk, “lose money now, make money later” type of operation. On the other hand, QuantumScape is demonstrating progress in advancing its solid-state battery technology.

Regarding the company’s 24-layer battery cells, QuantumScape proudly announced, “Most cells performed very well, meeting performance targets on fast charge and generally showing good cycling capacity retention and high Coulombic efficiency, with capacity loss of less than 1% per 100 cycles.” However, the company also warned, “[W]e have work to do to improve reliability as we transition from prototype to commercial product.”

Unfortunately, QuantumScape’s management didn’t provide a precise timeline for product commercialization. Therefore, investors should be on the lookout for future operational updates from QuantumScape.

What to Do Now With QuantumScape Stock

QuantumScape is poised to potentially change EV battery cell technology as we know it. Consider how explosive QS stock could be in a couple of years if dozens of automakers use QuantumScape’s products.

Just be patient and don’t expect a huge return on your investment next week. Instead, think about holding a few shares of QuantumScape stock through 2025 with a not-too-greedy price target of $20.

On the date of publication, David Moadel did not have (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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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