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QuantumScape (NYSE:QS), a startup founded a decade ago, touts a game-changing solid-state battery tech for EVs.

However, it’s unproven at scale and faces lawsuits over alleged fraud. A recent $300 million equity offering raised concerns about dilution.

Investing in QuantumScape may seem like a binary bet, hinging on whether they successfully bring a solid-state battery for EVs to market.

However, there are other factors to consider, which could make it a risky proposition at current prices. 

QuantumScape posted Q2 earnings of ($0.26) per share, missing estimates by ($0.04) and down slightly from the previous year. Analysts expect a full-year negative EPS of -0.98. The CTO sold 144,623 shares at $10.14 each, holding 766,495 shares currently.

A Closer Look at QuantumScape Stock

Credit Suisse AG substantially boosted its QuantumScape holdings in Q1 2023, owning 422,216 shares valued at $3,454,000, indicating 0.10% ownership.

However, not all important investors are buying into the stock. Insider Mohit Singh recently sold 10,300 shares at $8.52 per share, totaling $87,756. Singh now holds 700,386 shares valued at approximately $5,967,288.72.

Insiders have sold 584,894 shares worth an estimated $4,858,682 over the past 90 days. Insider ownership is currently at 10.18%, but appears to be on the downtrend. This update is relevant for investors and those tracking QuantumScape’s stock performance.

Solid-state batteries could revolutionize EV batteries, providing enhanced range and safety compared to current lithium-ion batteries. If SSBs can be mass-produced for EVs, they may quickly replace lithium-ion batteries.

However, short-sellers and others who have proven to be skeptical about the science behind these batteries have pointed to various issues tied to the eventual commercialization of these batteries that is concerning.

It’s one thing to produce an effect in a lab setting, and it’s another to test this effect int he real world.

Investors once pushed QS stock above $100 per share during the EV hype, and some still invest despite its low price.

A potential QuantumScape breakthrough may not significantly boost its current $7 per share value. Various macro factors may continue to pressure the stock, and market reaction to a breakthrough could be less positive than expected.

The Bearish View

Evercore ISI’s bullish case for QS stock has two flaws. First, commercialization isn’t imminent. While QuantumScape has advantages, there’s no clear timetable for robust revenue and profits from its EV battery technology.

Commercialization might take a decade or never occur. In the near term, this uncertainty could cause the stock to keep declining.

Cost advantages may not be as significant as they seem. Other factors further diminish QS’s attractiveness. Time will reveal if they have a technological edge, but competitors may reach the market sooner.

What Now

Investors in QS stock aren’t expecting quick gains; they know the QuantumScape story will unfold slowly. However, some believe the commercialization stage might not arrive until the mid-to-late 2020s.

QS stock could face impatience due to its long timeline, and shareholder dilution is a concern as the company may need more funding for SSB technology development.

I think this is a company investors can watch for a few years and probably pick up at a lower price. For that reason, I remain on the sidelines with this name right now.

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.

Although an inherently uncomfortable topic, investors need to seriously consider the idea of certain Nasdaq stocks to sell. With the namesake exchange featuring some of the most innovative – but also simultaneously risky – enterprises, you’ll want to do some fall cleaning here.

Another reason to target Nasdaq stocks to sell centers on basic realities. Consider a chess game – unless both sides are committed to a pure draw for some reason, the pieces will not stand as they are. Instead, with competitive chess, it’s not about if you lose pieces but which ones and under what circumstances.

So it is with the market. If you want consistent success, you can’t just be an indefinite buy-and-hold investor. At some point, you will have to let go of your stinkers. With that, below are three possible Nasdaq stocks to sell.

Nasdaq Stocks: United Fire Group (UFCS)

At first glance, United Fire Group (NASDAQ:UFCS) doesn’t seem a natural candidate for Nasdaq stocks to sell. As an insurance company, United Fire primarily offers property and casualty insurance through its subsidiaries. Unfortunately, the myriad difficulties associated with the post-pandemic recovery process have left UFCS in a bind. Since the start of the year, shares fell nearly 29%.

Even worse, they’re down 32% over the trailing one-year period. One factor to watch out for is the options arena. Specifically, the implied volatility (IV) curve screams upward in the far out-the-money (OTM) direction, peaking at 469%. On the other hand, IV only rises to 169% toward the far OTM call direction. Put another way, traders appear to be hedging for tail risk. Also, United’s financials don’t provide much encouragement. For example, its three-year revenue growth rate slips to 6% below breakeven. It also suffers from negative net margins.

Finally, Piper Sandler analyst Paul Newsome pegs UFCS a “moderate sell” with a $19 price target, implying almost 4% downside.

Veritone (VERI)

Based in Irvine, California, Veritone (NASDAQ:VERI) is an artificial intelligence-focused technology firm that provides computing solutions through its proprietary platform aiWARE. The underlying system integrates a range of machine learning models to process and transform unstructured data – like audio, video, and text – into structured data automatically. Notably, this has significant implications for everyday functionality.

As an example, in the media and entertainment space, Veritone allows for easy content classification, ad verification, and content monetization. Additionally, it can be used for serious needs such as predictive maintenance for infrastructure. Despite extraordinary relevancies, VERI hasn’t caught on with Wall Street, with shares down over 50% since the January opener. To be fair, it has some positives such as solid revenue growth. However, it also suffers from severely negative operating and net margins. Also, its Altman Z-Score of 1.49 below zero indicates deep distress.

Lastly, analysts peg VERI as a moderate sell with a $2.50 target, implying nearly 4% downside risk. Thus, it’s probably one of the Nasdaq stocks to avoid.

AudioCodes (AUDC)

Hailing from Israel, AudioCodes (NASDAQ:AUDC) held much promise during the early phase of the Covid-19 pandemic. With its advanced communication software, products, and services for enterprises and service providers, the company cut a utilitarian profile. However, when the calendar turned to 2022, the dramatic rise in inflation devastated AUDC. Since the January opener, it plunged nearly 43%.

Looking back over the past 52 weeks, AUDC dropped almost 55% in equity value. A key factor here may be the options market. Looking at AUDC’s IV curve, the metric peaks at 150% in the OTM put direction. On the other side of the fence, IV rises to a max of 110% in the OTM call direction. Again, it appears that traders are hedging for tail risk.

Financially, AudioCodes doesn’t seem too bad. With a strong balance sheet and consistent profitability, one might wonder what the fuss is about. However, AUDC could be one of the Nasdaq stocks to sell because of a conspicuous erosion of the top line.

In closing, analysts peg AUDC as a moderate sell with an $8.50 target, implying over 15% downside risk.

On the date of publication, Josh Enomoto 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.

Whenever positive industry tailwinds last for the long term, multiple new players enter the industry. This includes start-ups and existing companies that diversify. However, over time, fewer players remain. The industry cycles a phase of consolidation of potential company failures coupled with acquisitions.

This pattern holds true for the electric vehicle industry. In the next 12 to 24 months, certain EV stocks will plummet while others surge higher. A clear differentiation between leaders, laggards, and losers will come into view.

Let’s focus on the bearish outlook of three EV stocks to sell that are unlikely to create value. Even from a speculation perspective, these EV stocks look uninteresting.

Fisker (FSR)

Fisker (NYSE:FSR) stock has been resilient for year-to-date (YTD) 2023 with a downside of 7%. Currently bearish on FSR stock, I do expect a sharp correction in 2024. Notably, the short interest in the stock as a percentage of free-float is significant at 44%.

In a recent news, Fisker announced the target to deliver 300 vehicles per day in the U.S. and Europe. The company has manufactured 5,000 Fisker Ocean SUVs and already delivered to 900 customers. While this seems encouraging, it may be best to wait for quarterly numbers before taking a plunge.

Most concerning is the competition’s track record. Polestar Automotive (NASDAQ:PSNY) is on track to deliver 60,000 to 70,000 vehicles in 2023. However, PSNY stock has been trending lower as EBITDA losses sustain and further equity dilution is likely. Also, Lucid Group (NASDAQ:LCID) has been struggling with cash burn.

Fisker could fall upon similar concerns in the upcoming quarters. Potential equity dilution would translate into a sharp correction. Currently, the FSR has a low cash buffer of $521.8 million. Further, it remains to be seen if Fisker can meet its ambitious deliveries target.

Electrameccanica Vehicles (SOLO)

Electrameccanica Vehicles (NASDAQ:SOLO) is another stock to completely avoid, currently trading near 70 cents.

The first reason to avoid the stock is an intensely competitive EV market. Frankly, Electrameccanica is unlikely to survive a few years down the line. Further, SOLO launched a single-seater EV, which was the company’s differentiating factor. Sadly, it failed in that endeavor.

Additionally, the company has declined a merger with Tevva, a company focused on commercial EVs. Therefore, SOLO’s vision has completely changed with this proposed deal.

The merged entity is targeting a turnover of $1.3 to $1.5 billion by 2028. It’s likely that cash burn will sustain in the next few years and would imply further dilution of equity. With the commercial EV segment being equally competitive, the outlook is uncertain.

Mullen Automotive (MULN)

Mullen Automotive (NASDAQ:MULN) stock has been decimated after a correction of 99% in the last 12 months. The massive decline does not imply that MULN stock is undervalued. With the stock’s recovery unlikely, Mullen is unattractive even as a speculative bet.

Mullen Automotive has weak fundamentals with a first-time revenue of $308,000. Importantly, cost of sales was 81% of the revenue. Importantly, the cost of R&D is significant and has been increasing over the quarters. Unfortunately, the company hasn’t been able to translate its innovation into growth.

Currently, the company has cash and equivalents of $214 million. With cash burn sustaining, massive equity dilution is likely. Further, share repurchase in this scenario seems to be among the worst decisions.

In a recent news, Mullen has commenced delivery of Class 3 EV Cab Chassis Trucks. However, this event didn’t have any positive impact on the stock. It’s clear that investors prefer to stay away from this falling knife.

On the date of publication, Faisal Humayun did not hold (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.