Is a Giant Short Squeeze Brewing in QuantumScape (QS) Stock? thumbnail

Is a Giant Short Squeeze Brewing in QuantumScape (QS) Stock?

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QS stock - Is a Giant Short Squeeze Brewing in QuantumScape (QS) Stock?

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Today’s price action for QuantumScape (NYSE:QS) is notable. At the time of writing, shares of the solid-state battery maker have surged more than 7% today. However, over the past five days, QS stock are up more than 40%, with a chart that’s very much up and to the right.

This move comes amid a resurgence in a number of high-profile meme stocks and short squeeze plays. Whether we’re talking about Bed Bath & Beyond (NASDAQ:BBBY), AMC Entertainment (NYSE:AMC) or GameStop (NYSE:GME), these embattled stocks are flying once again.

For QuantumScape, a company with relatively high short interest, such a move may be expected. Currently, the company’s short interest ratio sits at around 23%, which is very high. Thus, if enough retail investors start buying stock and out-of-the-money call options, near-term surges can take place.

Let’s dive into whether such a speculative bet may make sense right now.

Is Now the Time to Buy QS Stock?

Before we jump into the near-term dynamics of this stock, let’s zoom out for a second. Putting this rally in context is important. That’s because QuantumScape is a former growth darling that’s been obliterated in 2022. Even factoring in this last week’s rally, over the past year, QS stock is down 60%. Thus, for longer-term growth investors, this stock has turned into more of a nightmare than a dream holding.

That said, this early-stage company focused on commercializing solid-state batteries (what some believe is the future of battery technology) is enticing to growth investors. The question is, at what price does this company make sense? After all, some short sellers have poked holes in the company’s thesis when it was trading around its peak in recent years.

Given the stock’s current momentum and the macro forces driving many speculative stocks higher, I wouldn’t be surprised if this rally is sustained for some time. That said, we saw what happened with QuantumScape’s previous impressive rally. Accordingly, QS stock should be reserved for only the most aggressive long-term growth investors, in my view.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.