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Jim Cramer - Mad Money QuantumScape QS-N DON'T BUY Apr 19, 2021

So many chased these EV SPACs to find the next Tesla. Many some will be gems, but for now the whole sector has collapsed. QS was one of the better SPACs, but their projections are aggressive and don't account for failure. Shares are down 76% from highs.

Jim Cramer - Mad Money

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$31.620

Stock price when the opinion was issued

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BUY

Strategy to play their lock-up period ending It shot up before Christmas, then collapsed on bad headlines related to SEC filings and a reverse merger with another company which created 100 millions of shares. Then QS planned to sell a ton of those shares, but in reality no lock-up expired. It's since pulled back to the mid-50s, and he likes it now.

COMMENT

They're trying to produce the first solid-state lithium battery for EVs. This stock has huge potential as it partners with Tesla.

BUY

Run by a great CEO. It's one of the few SPACs he likes. Their batteries are good.

COMMENT

EV SPACs are facing more scrutiny from aggressive short-seller. Yesterday, a short-seller accused QS of being a pump-and-dump scam, but didn't mention sources of information. QS defends itself as being highly transparent and stands by all its published data. The CEO even did a webcast to defend themselves today.

DON'T BUY

There's so much competition in the lithium battery space.

DON'T BUY

Very wary. He wants to see Volkswagon take a bigger stake in QS and then things will really get rolling.

DON'T BUY

It's losing a lot of money.

DON'T BUY

It went public in Nov. 2020, a time when anything EVs rallied. This jumped 50% when it IPO'd. Hype. Then, shortsellers called it a scam. The company hasn't made money or profits. No revenues. By late 2022, shares were obliterated along with many EV shares of this era like Lordstown Motors.

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TOP PICK

QuantumScape (QS) is a company at the forefront of the energy storage industry. Specializing in the development of solid-state lithium-metal batteries, the company aims to revolutionize electric vehicle (EV) energy storage. By providing batteries that offer higher energy density, quicker charging times, and longer lifecycle than traditional lithium-ion batteries, QuantumScape aspires to become a game-changer in the EV market. However, as an emerging company in a highly competitive and fast-evolving sector, QuantumScape’s stock performance remains closely watched by investors. Social media mentions are up 2470% in the past 24h.

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Brian Madden

First Avenue Investment Counsel