After remaining sideways to marginally lower for an extended period, QuantumScape (QS) has skyrocketed by 312% in the last six months. 

Recently, QuantumScape had two key announcements that have accelerated the stock upside. First, QuantumScape and PowerCo SE showed off its solid-state batteries in a Ducati demo motorcycle at IAA Mobility. This marks an important step towards commercialization. Further, QuantumScape and Corning (GLW) announced an agreement for ceramic separator development and commercialization.

These announcements have translated into significant price action, but valuation is a potential concern.

About QS Stock

QuantumScape, headquartered in San Jose, California, is focused on the development and commercialization of solid-state lithium-metal batteries. 

With increasing adoption of electric vehicles globally, the company has a big potential addressable market. Additionally, the company is looking at the use of its solid-state batteries in other applications. As a matter of fact, QuantumScape already has agreements in other sectors that include consumer electronics and stationary storage. 

Backed by positive industry tailwinds and the recent agreement announcement, QS stock has been surging higher, to the tune of almost 200% year-to-date (YTD).

Leading the Solid-State Battery Race

QuantumScape claims to be the industry leader in the next-generation solid-state lithium metal battery technology. This claim is strengthened by the company’s licensing arrangement with Volkswagen (VWAGY) Group’s battery maker, PowerCo.

In Q2 2025, QuantumScape announced that PowerCo will be infusing additional liquidity of $131 million over the next two years. This will support the company’s joint commercialization effort and also extend the cash runway forecast into 2029.

The company’s recent agreement with Corning is also an important step towards the commercialization of the next-generation battery technology. The partnership will work towards high-volume production of QuantumScape’s ceramic separators for commercial applications.

QuantumScape Stock Valuation Seems Stretched

There seems to be little doubt on the point that QuantumScape is moving in the right direction with the backing of strong industry partners. 

However, the current market valuation of $9 billion might be indicative of stretched valuations. A price-to-book (P/B) value of 7.9 also points towards rich valuations. 

It’s important to note that the commercialization of solid-state batteries is unlikely anytime soon. In Q2 2025, QuantumScape indicated that the company is targeting 2026 for the beginning of field testing. For the first six months of 2025, QuantumScape reported an adjusted EBITDA loss of $127 million. With commercialization of solid-state batteries still a few years away, cash burn is likely to continue. 

Of course, QuantumScape has a strong liquidity buffer, and with the backing of Volkswagen, financing is unlikely to be a concern. However, valuations ultimately depend on the company’s free cash flow potential. 

Analysts Warn of 60% Correction in QS Stock

The progress in the development of the solid-state battery, coupled with the recent agreement with Corning, has translated into a massive rally for QS stock. 

However, if we consider analyst ratings, it’s time to be cautious. Of the nine analysts covering QS stock, only one recommends a “Strong Buy.” While five analysts have assigned a “Hold” rating, three recommend a “Strong Sell.” 

If we look at the mean analyst price target of $6.36, there is a downside potential of 60%. Further, even the most bullish analyst has a price target of only $11 for QS stock. This would imply a downside of 30% from current levels. 

It’s also worth mentioning here that QS stock has a 60-month beta of 4.85. This is indicative of high stock volatility as compared to the index. Therefore, a sharp correction on profit booking might not be surprising.