Let’s not mince words here. It requires a great deal of patience to invest in solid-state electric-vehicle battery maker QuantumScape <QS>. There are currently a number of QS stock investors holding the bag after a strong recent downtrend.

On top of that, Wall Street analysts don’t expect QuantumScape to have any sales until 2024. Surely, that’s a hard pill for some investors to swallow.

What we need to bear in mind is that QuantumScape is a development-stage company. In other words, investing in the company means having a vision for the future rather than focusing too much on the present.

And thankfully, QuantumScape’s outlook for the near future suggests that the company should at least have enough capital available to flesh out its profoundly ambitious vision.

A Closer Look at QS Stock

First, a technical point: for much of 2020, QuantumScape was tradable through a shell company known as Kensington Capital, which had the stock ticker symbol KCAC.

The business combination between Kensington Capital and QuantumScape was finalized on Nov. 27 of that year.

So, now let’s get down to the nitty-gritty. If you wanted to pick a poster child for the electric vehicle hype-and-fade cycle, QuantumScape would be a good candidate.

For QS stock traders, the hype phase occurred in late 2020. During that year, the share price rocketed from around $10 in August to a mind-melting 52-week high of $132.73 in December.

So far, however, 2021 has been less kind to QuantumScape’s shareholders. January was particularly dreadful, with the share price ending that month at around $44.

The following months weren’t really any better. By the close of the market on May 14, QS stock had fallen to $27.29.

Therefore, it’s understandable if the long-term stockholders are disappointed. Let’s now see if a recent earnings report can provide some hope of a recovery.

Sorry, No Revenues

I’ll go ahead and start with the bad news. During the first quarter of 2021, QuantumScape reported no revenues whatsoever.

This shouldn’t be too shocking to most of the company’s investors. They ought to know by now that this is a pre-revenue company, and will continue to be that way for a while.

Also, QuantumScape reported a net loss of 20 cents per share for the first quarter of 2021. That’s substantially worse than the 6-cent net loss from the year-ago quarter.

It’s also a miss compared to net loss of 7 cents per share which analysts polled by FactSet expected for 2021’s first quarter.

And don’t forget, QuantumScape is still trying to shake off a stinging report from Scorpion Capital.

That firm sarcastically charged that QuantumScape “claimed to have a ‘magic material’ that’s led to a breakthrough solid-state battery for electric vehicles.”

Liquidity and Legitimacy

In the wake of Scorpion’s harsh accusation, it appears that QuantumScape is fighting an uphill battle for legitimacy in the eyes of analysts and traders.

Fortunately, there’s a hint of hope contained in QuantumScape’s outlook for 2021. In particular, the company expects to be well-capitalized.

“Net of financing proceeds from our follow-on equity offering, VW

investment, and public warrant exercises, we expect to enter 2022 with greater than $1.3B in liquidity,” the company projected.

Moreover, QuantumScape expects that it will be fully funded “through initial QS-1 production.”

With that, the company is looking to execute on several critical milestones:

• Deliver prototype samples in commercially relevant form factors to auto original equipment manufacturers from QuantumScape’s engineering line in 2022
• Provide cells for research and development test cars from QS-0 in 2023
• Enter commercial production during the 2024-to-2025 time frame

The Bottom Line

Holding QS stock was enjoyable in late 2020, but not nearly as much fun in early 2021.

Patience will still be required to stay in the trade. With a long-term vision and a sufficient appetite for risk, however, an investment in QuantumScape could offer surprisingly strong returns.

The stock market can be unpredictable, volatile, and sometimes totally nonsensical. InvestorPlace.com strives to cut through the noise and bring you information on what matters – and how it impacts your portfolio. We deliver thoughtful coverage on everything from stocks to cryptos to pre-IPO investments. So whether you live and breathe breaking stock news or expect your stocks to pay you, InvestorPlace.com has your back.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

QS shares fell $0.08 (-0.29%) in after-hours trading Monday. Year-to-date, QS has declined -67.22%, versus a 11.50% rise in the benchmark S&P 500 index during the same period.

About the Author: David Moadel

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. More...

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