QuantumScape Corp (NYSE: QS) is inching down in premarket on Thursday, even though the EV battery specialist reported a strong Q2 and announced an extended deal with PowerCo.
In the second quarter, the company based out of San Jose, California, lost 20 cents on a per-share basis, slightly less than the 21 cents a share that experts had forecast.
Additionally, the expanded collaboration with Volkswagen’s battery segment will bring in roughly $131 million in additional payments to QS over the next two years as well.
In its earnings release, the NYSE-listed firm also confirmed that it has improved its cash runway by another six months, now expected to sustain operations well into 2029.
However, despite strong earnings and the aforementioned extended deal, there’s reason to consider pulling out of QuantumScape stock that’s currently up more than 250% versus its year-to-date low in early April.
Valuation remains a big overhang for QS shares
It’s evident that QuantumScape has set out to reshape the global EV battery industry with its state-of-the-art solid-state rechargeable lithium metal offerings.
But investors should practice caution in buying QS shares today, as much of the company’s future growth looks baked into its current valuation already.
QuantumScape stock is going for a forward (2027) price-to-sales multiple of more than 100 at the time of writing, indicating limited upside potential and barely any downside protection for a market downturn.
Given that the NYSE-listed firm is yet to start generating significant revenues, owning it here despite stretched valuation may only be a speculative bet at best.
Insiders have been selling QuantumScape stock
Investors should remain wary of buying QuantumScape shares also because the company insiders have been net sellers over the past three months, indicating that they believe the battery stock is overvalued at current levels.
Insider selling can signal a lack of confidence in the business’s future prospects, raising red flags for investors.
While insiders may sell for personal reasons, frequent or large-scale sales, especially after strong performance, can suggest the stock is overvalued or that growth may slow.
It may also indicate insiders believe better opportunities lie elsewhere.
This perceived pessimism can erode investor trust in QS stock, trigger selling pressure, and ultimately drive the price down.
How to play QuantumScape in the second half of 2025
While QuantumScape’s second-quarter results and expanded partnership with VW’s PowerCo are encouraging, its lofty valuation and insider selling raise serious concerns.
QS shares’ meteoric run since early April may already reflect much of its future potential, leaving little room for error.
With limited revenue and a super-elevated forward P/S ratio, QS appears more speculative than fundamentally sound.
Therefore, it’s wise to wait for clearer signs of execution before committing capital at these levels.
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