This probably ends poorly for those wagering their hopes and dreams on EV stocks. Not for nothing, but the number of new entrants in the space is off the charts. Doesn’t really give one confidence that there are high barriers to entry.
Dyson can attest to that, which is at least partly why the company dropped its electric vehicle efforts. They didn’t see enough room for differentiation.
Elon Musk likely recognizes that as well which is why he’s peddling auto-pilot software that, according to some independent analysts, isn’t as good as other products on the market.
Now you have Quantumscape which has some interesting potential battery technology, but potential is the operative word. The EV mania has pushed this company up to an almost $50 billion valuation. There’s no commercial product yet. Truly remarkable!
Al Root reports in Barron’s (abridged):
QuantumScape stock’s epic run continued Tuesday. Shares closed at $131.67, up another 39% after rallying 29% on Monday. The numbers are, to say the least, incredible.
Shares of the electric vehicle battery company have gained almost 80% this week and about 593% over the past three months. Both numbers aren’t really comparable to the returns of much else, including the S&P 500 and Dow Jones Industrial Average.
Figuring out what’s going on isn’t easy. Anecdotally, there isn’t a lot of stock to borrow. That means a short squeeze might be at play. Short sellers have to borrow stock to sell it short, betting on price declines. No shares to borrow can mean too many short sellers are already in the stock.
QuantumScape stock doesn’t appear to be heavily shorted, but it’ new and it’s possible short-selling data aren’t up to date. The merger that made Quantum a publicly traded player only closed in late November.
Whatever the reason, gains leave Quantum stock worth almost $59 billion based on the 448 million proforma shares outstanding after the company’s merger with a SPAC. QuantumScape wasn’t immediately available to get an updated share count.
That’s more than existing battery makers LG Chem(051910.Korea), Samsung SDI(006400.Korea), and Panasonic(6752.Japan). Contemporary Amperex Technology,or CATL, (300750.China) is valued at roughly $110 billion.
Read more here.