Why Quantumscape Corp (NYSE: QS) Stock Is Going Gangbusters Today

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Quantumscape Corp (NYSE: QS) stock rose over 12.4% on Feb 17th, 2021 (as of 10:32 am GMT-5 ; Source: Google finance) after the company in the fourth quarter of FY 20 has reported the adjusted loss per share of $2.41. The company has for the first time reported that the company have made 4-layer multilayer cells in the 30x30mm form factor, and the company has now seen close to 800 cycles at 30°C with over 90% capacity retention at both C/3 and 1C rates,  which is substantially similar to the single-layer cells the company reported in December. The company has used 30x30mm cells, made from separators cut from the standard target commercial area separators, because it allowed the company to effectively quadruple the number of test cells as it is working to scale up the engineering line capacity.

In 2021, the company plans to spend between $230M and $290M in combined opex and capex to support the multilayer cell development, to continue to develop our production processes, and to build out QS-0. The company plans to spend between $0 to $60M on a net cash basis, assuming receipt of proceeds from the VW financing and assuming exercise of public warrants. This would allow the company to enter 2022 with a liquidity position of over $900M, which means there is sufficient funding, to fund the company through first production.

Meanwhile, the fourth quarter of 2020 was historic for the company as it had completed the business combination with Kensington Capital Acquisition on November 25, 2020 and became a publicly listed company on the NYSE. The liquidity position had increased by $730M in gross proceeds from the business combination ($230M from KCAC’s trust account and $500M from KCAC’s PIPE offering). Further, the company also received $388M in gross commitments earlier in the year from a Series F offering ($288M closed in November and December 2020, and an incremental $100M investment is expected from Volkswagen upon achieving a technical milestone in Q1’21). These transactions have raised the liquidity position to over $1B. The company expects the current cash and aforementioned Q1’21 milestone-based investment to fully fund the long-term business through first commercial production targeted for 2024.

On the other hand, the company now needs to make these multilayer cells using the commercial area 70x85mm layers, increase the number of layers, aiming first for 4 layers and subsequently for 8 to 10 layers by year end, optimize the manufacturing processes, and address any new challenges. To increase the capacity, the company is ordering new automation and production tools, including an automated stacker and continuous flow heat treatment tools. To help with further scale-up and based on this recent progress the company has decided to build a pre-pilot line facility in San Jose which is called QS-0.

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