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QuantumScape Was Unknown. Now It’s One of the Most Valuable Stocks in the Car Industry.

Illustration by Elias Stein

QuantumScape’s amazing rise continued this past week, like a gift from a market Santa. Shares of the electric-vehicle battery maker closed at $131.67, up another 39% after rallying 29% on Monday. The stock gained almost 70% over one week, and 390% since going public in late November.

On Tuesday, Quantum stock was worth $59 billion, based on fully diluted 448 million pro forma shares outstanding. The company passed rivals, including LG Chem, Samsung SDI, and Panasonic, in market value. One exception: China’s Contemporary Amperex Technology, which was worth roughly $110 billion. But Quantum was also larger in market value than Ford Motor and General Motors, every auto component of the Russell 3000 except Tesla, and two of the largest auto-parts companies in the world, Japan’s Denso and Germany’s Continental. The shares fell back later in the week to a market cap of $51 billion.

QuantumScape went public in a merger with a special purpose acquisition company, or SPAC, Kensington Capital Acquisition. GMO’s Jeremy Grantham invested $12.5 million in QuantumScape seven years ago through his foundation, a 4.8-million-share stake now worth $551 million. (GMO confirmed that he still owns all the stock.) Grantham dislikes SPACs, he told the Financial Times, but the stake “accidentally” turned into the largest investment he has ever made.

Race to the Top

QuantumScape has quickly climbed into the top ranks by value of auto-related companies.

Source: Marketwatch

What’s really driving the shares? Anecdotally, there isn’t much stock to borrow, which suggests a short squeeze. And EVs and batteries are hot right now. Tesla continues to rise, and Reuters reported that Apple plans to enter the EV market by 2024, with its own battery technology, which might compete with Quantum’s. Or maybe it’s just Santa.

Next Week

Monday 12/28

The Federal Reserve Bank of Dallas releases its Texas Manufacturing Outlook Survey for December. Consensus estimate is for an 11 reading, similar to the November figure. The index has rebounded sharply from a record low set in April and stands at its highest since late 2018.

Tuesday 12/29

S&P CoreLogic releases its Case-Shiller U.S. National Home Price Index for October. Economists forecast a 7% year-over-year increase, matching the September data. That figure is the highest for the index since May of 2014, as the housing market continues to be a bright spot for the economy.

Wednesday 12/30

The Institute for Supply Management releases its Chicago Purchasing Manager Index for December. Expectations are for a 56.8 reading, a decrease from November’s 58.2.

Tiffany holds a virtual special shareholders meeting to vote on a proposed merger with LVMH Moët Hennessy Louis Vuitton. LVMH initially agreed to buy Tiffany in an all-cash transaction for $135 a share 13 months ago in a deal valued at $16 billion. Due in part to shutdowns caused by the pandemic, the price was renegotiated down to $131.50 a share in October, saving LVMH $430 million.

The National Association of Realtors releases its Pending Home Sales Index for November. Expectations are for a flat reading, month over month. The index fell by 1% in September and October after posting strong gains in the summer. The index currently stands just below its all-time peak set earlier this August.

Devon Energy and WPX Energy hold special shareholder meetings to seek approval for their proposed all-stock merger of equals first announced in late September. Under the terms of the deal, Devon shareholders would own about 57% of the combined entity, which would have an enterprise value of roughly $16 billion.

The Census Bureau reports the international trade balance in goods for November. It’s expected to come in at about an $80 billion deficit, similar to the past four months. The trade deficit in goods hit a record monthly high of $83.9 billion in August.

The Mortgage Bankers Association releases its Market Composite Index, which tracks mortgage-loan application volume, for the week ending on Dec. 25. The index is up strongly year over year, as the 30-year fixed rate is a full percentage point lower than a year ago, at a recent 2.86%.

Thursday 12/31

Fixed-income markets close early at 2 p.m. EST for New Year’s Eve. However, the New York Stock Exchange and Nasdaq keep regular trading hours.

The Department of Labor reports initial jobless claims for the week ending on Dec. 26. Jobless claims have increased in December, averaging 852,000 a week, as Covid-19 cases have spiked in parts of the country. Until December, claims had fallen every month since April, averaging 740,500 a week in November, down from the April peak of more than five million a week.

Friday 1/1

Stock and bond markets are closed in observance of New Year’s Day.

Write to Al Root at [email protected]

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