Shares of QuantumScape (QS, Financial), SolarEdge (SEDG), and Sunnova Energy (NOVA) experienced significant declines on Tuesday, driven by rising long-term interest rates. QuantumScape fell 4.16% to $4.84, SolarEdge dropped 10.53%, and Sunnova decreased by 2.87%. The increase in interest rates, influenced by the 10-year Treasury bond yield climbing over 12 basis points to 4.433%, has added pressure on sectors reliant on financing, such as solar and electric vehicles.
QuantumScape (QS, Financial), known for developing next-generation solid-state lithium-metal batteries, remains in a pre-revenue phase. The company has a significant cash burn, reported at $110 million last quarter, accentuating its vulnerability in a rising interest rate environment. The stock's market capitalization is approximately $2.48 billion, with a price-to-book ratio of 2.23. QuantumScape's stock price is close to its 5-year low, reflecting market pessimism regarding its financial outlook. The company has a Piotroski F-Score of 2, indicating potential financial challenges, and insider transactions have shown 10 sell actions in the past three months. Notably, the stock is categorized under "Distressed" type, emphasizing its speculative nature amidst current market conditions.
The rise in interest rates is a critical factor affecting QuantumScape's ability to raise funds, as both equity and debt financing could become more expensive and challenging. Despite its financial strength in terms of liquidity, with a current ratio of 14.07, the lack of profitability and negative earnings per share (-$0.95) highlight its precarious position. Investors should be cautious and closely monitor the macroeconomic environment as QuantumScape navigates these uncertainties.
GF Value assessments indicate that the stock cannot be evaluated due to its pre-revenue status, adding another layer of complexity for investors considering QS as a potential investment.
