Why did QS plummet?

``` The deep research logic is organized as follows: Okay, let's tackle why QS plummeted. First, I need to look at the data provided. The user is asking about the recent drop in QuantumScape's stock price. Let me check the references. From Reference 1, the stock closed at $12.52 with a last change of -14.48%. The pre-market drop was -4.64% and post-market -4.39%. That's a significant decline. Reference 2 shows the percentage changes over the past two weeks. The stock had a big run-up, hitting a 52-week high on July 15th, but then dropped 14.48% on July 21st. Looking at the news articles, Reference 3 mentions that QS hit a new 52-week high due to manufacturing breakthroughs and cost-saving measures. The Cobra separator process was a key factor, allowing a 25-fold improvement in production speed. However, the recent drop might be related to profit-taking after the rally. Reference 13 and 14 both note that the stock fell around 15-17% ahead of earnings on July 23rd. Investors might be taking profits before the earnings report, which could be uncertain. Also, Reference 17 talks about a collaboration with Murata Manufacturing, but the stock still dropped. Maybe the market was expecting more from that partnership. The technical analysis in Reference 7 and 18 suggests a bullish cycle starting, but the recent drop could be a pullback after reaching resistance levels. The user's profile mentions interest in technical analysis, so I should highlight the technical factors like RSI levels and profit-taking. The user is into short-term trading and high volatility, so the recent volatility in QS aligns with their interests. The stock's liquidity is high, as seen in the trading volume mentioned in Reference 6. The drop could also be due to institutional investors reassessing the valuation after the rapid rise. The company is still pre-revenue with a high market cap, which might concern some investors. Putting it all together, the main reasons are profit-taking after a rally, upcoming earnings uncertainty, and potential reassessment of the company's valuation despite positive news. The technical factors like overbought conditions and resistance levels also played a role. The user's focus on technicals and short-term trading means emphasizing these aspects would be relevant. ``` ### **Conclusion** 🚨 QuantumScape (QS) plummeted by **14.48%** on July 21, 2025, closing at **$12.52** after reaching a 52-week high earlier in the week. The sharp decline was driven by **profit-taking** following a **20% surge** over the prior five trading days, **upcoming earnings uncertainty**, and **market skepticism about its high valuation** despite recent breakthroughs in its solid-state battery technology . Let’s break down the key factors: --- ### **Analysis** 📊 #### 1. **Profit-Taking After a Breakout** - QS had surged **141% year-to-date** and **20% in the past week** (July 17–21) on optimism around its **Cobra separator process** (a 25x improvement in production speed) and partnerships with **Volkswagen** and **Murata Manufacturing** . - However, the stock’s **$7 billion market cap** (despite zero revenue) raised concerns about **overvaluation**, prompting traders to lock in profits ahead of its **Q2 earnings report** (scheduled for July 23) . | Metric | Value (July 21, 2025) | Context | |------------------------|-------------------------|-------------------------------------------------------------------------| | Closing Price | $12.52 | Down 14.48% from previous close | | Pre-Market Drop | -4.64% | Profit-taking amid high volatility | | Post-Market Drop | -4.39% | Continued selling pressure post-close | | Year-to-Date Gain | +141% | Outperformed the S&P 500 (+7.62%) | |code|Ticker|Name|Date|Pre-Market Percentage Change|market_code| |---|---|---|---|---|---| |QS|QS.N|QuantumScape|20250721|-4.6448087431693965|169| |code|Ticker|Name|Date|Post-Market Percentage Change|market_code| |---|---|---|---|---|---| |QS|QS.N|QuantumScape|20250721|-4.794728434504784|169| #### 2. **Earnings Uncertainty** - Analysts expect a **Q2 2025 EPS loss of $0.25** and **adjusted EBITDA loss of $64.6 million** . - The company remains **pre-revenue** with a **$860 million cash runway** (extending to 2028), but its **$1.03 billion net loss** in 2024 raises concerns about **sustainability** . #### 3. **Competition and Market Sentiment** - Solid-state battery startups like **QuantumScape** face intense competition from **Tesla**, **Samsung SDI**, and **Toyota** . - The broader market showed **mixed performance** (Dow +0.3%, Nasdaq -0.2%) amid AI-driven growth and trade policy uncertainty . --- ### **Key Takeaways** 📝 - **Short-Term Risk**: QS’s volatility (14.48% drop in one day) aligns with your interest in **high-volatility stocks** and **day trading**. - **Long-Term Potential**: The company’s **Cobra separator breakthrough** and **$860 million cash runway** position it for **future growth**, but execution risks remain high. - **Strategy**: If you’re **day trading**, consider **technical levels** (e.g., $9.52 and $13.86 support/resistance) and **RSI overbought conditions** . For **long-term holds**, wait for **Q2 earnings clarity** and **partnership updates**. Let me know if you’d like to dive deeper into the **technical analysis** or **valuation metrics**! 🚀