We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch. In this article, we are going to take a look at where QuantumScape Corporation (NYSE:QS) stands against the other stocks in Jim Cramer’s watchlist.
Jim Cramer, the host of Mad Money, urged investors to refrain from making any investments in high-value stocks, particularly in the Big Tech sector, ahead of upcoming earnings reports, which will attract considerable scrutiny. Cramer expressed concern over significant price movements in various stocks leading into earnings, stating, “you can’t make up these moves.”
READ ALSO Jim Cramer on Tesla and Other Stocks and Jim Cramer is Talking About These 12 Stocks
He emphasized that these surges create heightened risks for those looking to purchase stocks before a company’s earnings announcement. He pointed out that there is underlying volatility affecting nearly every major company. He noted that the stocks that he mentioned on Friday were trading erratically high on October 28. You can read which stocks Cramer discussed on Friday in our article, Jim Cramer’s Latest Game Plan: 20 Stocks to Watch.
He went on to highlight that:
“First you need to understand that no one knows these earnings numbers ahead of time except the CEO, the CFO, and a very small group of very important people at each company, and they are tight-lipped.”
Cramer criticized analysts for their attempts to predict earnings, stating, “We’ve seen how wrong they can be over and over again.” According to Cramer, when a stock spikes before earnings, it does not indicate insider knowledge but rather excessive enthusiasm. He further cautioned that these price increases are occurring without any solid basis, making it perilous for investors. He said, “In other words, these stocks are going up on nothing and that I think makes it very dangerous.”
Cramer reiterated his advice and said:
“I am indeed trying to discourage you from trading these stocks ahead of the quarters. It’s just a roulette game based on nothing. Often the game feels rigged, you just don’t know which way it’s rigged because companies really and truly do not let this stuff drip out.”
Concluding his remarks, he said:
“Bottom line, no one on Wall Street knows what any of the quarters will look like, except for the principals. So don’t bother to follow the money that you see trading right now in anticipation. You know why? It’s a fool’s errand.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the lightning round of his episodes of Mad Money on October 25 and 28. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A line of electric vehicles parked in front of a research & development building in San Jose, California.
QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 11
Commenting on QuantumScape Corporation (NYSE:QS), Cramer said:
“No… The guys who told me to buy QuantumScape, they were Quantum wrong. So I don’t want to be Quantum wrong. I want to be Quantum right. I would avoid QuantumScape. Quantum escape, so to speak.”
QuantumScape (NYSE:QS) is a research and development-focused company dedicated to creating and commercializing solid-state lithium-metal batteries for electric vehicles and other applications. The company is working to advance battery technology to meet the increasing demand for efficient energy storage solutions. On October 23, it released its third-quarter report, revealing that it did not generate any revenue, as the company has not yet commercialized its products.
The net loss increased from $111 million to $120 million or a loss of $0.23 per share, which aligned with Wall Street’s expectations. While these figures were expected, the company highlighted a significant development: it had begun producing the first test samples of its QSE-5 batteries during the quarter and had commenced shipping these test cells to automotive customers. Achieving this milestone was one of its key objectives for 2024.
QuantumScape’s (NYSE:QS) approach to mass production involves a two-stage plan for manufacturing the components needed for its solid-state electric vehicle battery. The initial stage, referred to as the “Raptor” process, has been successfully utilized to produce low-volume prototypes.
The company also announced that the first low-volume B-sample battery cells from this production process have been shipped for testing by automotive clients. Looking ahead, the next phase, known as the “Cobra” stage, is currently under development alongside efforts to mass-produce the solid-state electrolyte separator and is expected to commence in 2025.
Overall QS ranks 9th on Jim Cramer’s stock watchlist. While we acknowledge the potential of QS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than QS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.