$QS, Another EV Scam

QuantumScape ($QS) has been the hottest player in the EV space thus far. A SPAC that went from $10 to $100 within 3 months, and had the alleged backing of Volkswagen, Bill Gates, Khosla Ventures, and other massive players. They claim to have a solid state battery that nearly defies the laws of physics, completely outperforming Tesla and all competitors by orders of magnitude. Like having a nuclear engine in medieval France. But as it turns out, much of what they alleged is likely false. Like Theranos. And Nikola. And many others. All of whom had big institutional backing. QS was trading over $100 and now it's at $30. It belongs at $10.

Scorpion Capital released a damning exposé accusing QS of outright fraud. They interviewed dozens of insiders from QS, Volkswagen, and neutral industry experts. All of them said that the CEO was essentially lying. If true, this stock is another worthless SPAC and would be a fantastic short play. Let's find out!

Firstly, is Scorpion Capital exaggerating their claims? If yes, they will go to jail. Defamation, libel, securities fraud, etc. And though these millionaires are total gaybears, it's highly unlikely they will risk jail. Experts have been throwing up red flags about QS as far back as January, and filed for an SEC investigation.

Their market cap is currently $14B and yet they will have zero revenue for the next 5-10 years, if ever. Good luck to anyone who wants to hold that bag for half a decade. Scorpion Capital's expose dropped QS from $40 to $30, but it's only a matter of time before it drops to it's initial offering of $10/share like Nikola, another EV scam. They have a billion in the bank so there's some cushion there.

QuantumScape's CTO, CFO, CLO, CSO, CDO all sold millions of dollars of shares in the past 60 days. Suspicious. On New Year's an institution dumped their position and tanked the stock. The CEO said on Mad Money that there is a lockup period expiring in late May, and that big private investors will finally be able to sell their stock. And oh, how they will.

The CEO Jagdeep already became a billionaire off this SPAC launch. Doesn't matter to him now whether he delivers the product or not. He could throw his hands up in 2yrs and say "oops, sorry guys we couldn't do it." And nobody would blame him.

Let's compare this to Theranos. Watch Elizabeth Holmes on Mad Money. She was beyond convincing. Nobody could've guessed that she was lying through her teeth. Safeway and Walgreens? How could they be wrong?? Jagdeep is similar on Mad Money, he defers to the credibility of his Volkswagen partners, attacks the reputation of the whistleblowers, and never addresses the claims directly.

But Volkswagen didn't really "invest" $100mm.

They got their shares for SIX DOLLARS. The market value was FIFTY. QuantumScape gave them over a billion dollars of literal free equity. Why would VW say no to free money? This is exactly what happened with Nikola, Theranos, and all the others. They got these "massive investments" from reputable companies only for it to be revealed that these "investments" were actually just free equity handouts for 90% under the market value. Volkswagen can sell 10% of their shares back into the market and immediately recoup their investment. And guess what? They probably have. That's why the stock went DOWN after they invested, when it should have gone UP. Insiders are dumping. Retailers are holding the bag.

Volkswagen has a history of lying to the world. Look up "Dieselgate." Fun fact, they were also founded by Adolph Hitler. Tsk tsk.

Also, Bill Gates doesn't actually "endorse" or "back" QuantumScape. He's an indirect investor through Khosla and has never once spoken the word "QuantumScape". Not once! Why? If this is the next Tesla, why wouldn't he be running press circuits promoting it like he does with his other investments? In fact, the only time he's spoken about electric vehicles was to say that most SPACs are scams. Makes you wonder.

Even if CEO Jagdeep is right, and they're sitting on the greatest battery in the universe, who cares? Zero revenue for at least FIVE YEARS?? You know how much changes in five years? Five years ago Obama was fighting ISIS and no one had even heard of cryptocurrency. In five years Tesla, Microvast, CATL, and a hundred other startup companies will have caught up. How could they not? Their lives depend on it! Everyone's been working on solid state batteries for years.

Having worked in consumer electronics I can tell you that in the manufacturing world, "5 years" means "I have no idea." There is no such thing as a 5-year timeline in manufacturing. If you don't know how to do it in 2 years, you don't know how to do it. Consumer auto probably has the highest quality control standards second to aviation. They could sell a million batteries and find out 1/1000 melt down after a year of use. Once the product ships, a whole slew of new problems emerge.

CEO Jagdeep made his money selling a promise, not a product. And investors agreed to it! Despite his history of involvement in scams! He has a million excuses for why he won't be able to deliver his product, and nobody will be able to blame him.

I think it's going to take a while for the truth to really sink in for existing investors, who have so much at stake. It's easier to fool a man than to convince him he's been fooled, as Mark Twain says.

This is just another vaporware SPAC that belongs at $10.

So I'm shorting $30k at $32/share until we get there.