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QuantumScape Stock Is Surging. Here Are Some Theories for the Move.

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Shares of EV-battery maker QuantumScape are soaring. There isn’t much news to pin gains on, but a confluence of factors might be at play.

Courtesy QuantumScape

Shares of electric-vehicle solid-state-battery technology company


QuantumScape

are surging in Friday trading. There isn’t much new news to pin gains on, but a confluence of factors might be at play.

QuantumScape (ticker: QS) stock is up more than 11% in Friday trading. The

S&P 500 index
and

Dow Jones Industrial Average
are down 0.3% and 0.2%, respectively.

It’s a big jump in the shares considering that the broader market is weak, and there hasn’t been any splashy announcement from the company on Friday.

The company did make news this week, reporting third-quarter results. QuantumScape doesn’t have sales yet, so the quarterly reports are a chance to review progress made developing solid-state batteries. QuantumScape stock dropped 8.5% after the report, rose 8.4% on Thursday, and are up 10.1% Friday.

Friday’s trading might be an ongoing, lengthy reaction to the quarterly report.

“Solid state” for QuantumScape and other tech startups refers, in this case, to a solid electrolyte, instead of a liquid electrolyte, facilitating the flow of electricity in a battery. Solid-state batteries promise lower cost and better performance for EVs, but the technology is still in the development stage.

Analysts are feeling a tiny bit more bullish after earnings. The average analyst price target for QuantumScape stock is up 20 cents to $38.20 after earnings. Neither of the Buy-rated analysts, Morgan Stanley’s Adam Jonas and Cowen’s Gabriel Daoud, changed their price targets. Jonas’ target, the highest on the Street, is still $70. Daoud values Quantum stock at $36 a share.

A deal made by another solid-state battery player might be helping QuantumScape, too. Wednesday evening Solid Power announced it was working with EV battery maker


SK Innovation

(096770.Korea), which is investing $30 million in the company. An existing battery maker contributing money is a sign the industry is taking start up technology seriously.

Solid Power is merging with special-purpose acquisition company


Decarbonization Plus Acquisition Corp III

(DCRC). The SPAC shares are up in Friday trading too, and up both days since the SK announcement.

Maybe Barron’s has something to do with Friday’s move. A recent article about the industry-wide need for more EV batteries mentioned QuantumScape, but we didn’t recommend the stock. This is probably the least likely reason for the jump.

The final reason the stock’s gain is technical. QuantumScape has traded almost 26 million shares as of 12:25 p.m., already three times the daily average volume. Exactly why the volume is up remains a small mystery.

More stock trading will always result in a bigger move, up or down, than average. More demand than average, in QuantumScape’s case, means prices will rise.

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