Eventually, there may be compelling reasons to bet your hard-earned capital on solid-state lithium-metal battery manufacturer QuantumScape (NYSE:QS). Right now, however, QS stock gets a “D” rating due to the risks involved. The short squeeze potential shouldn’t appeal to sensible long-term investors. Besides, QuantumScape’s financial profile might improve someday, but it’s not particularly impressive right now.

Week after week and month after month, QuantumScape’s loyal investors can hang their hopes on a vision of millions of cars running on solid-state lithium-metal batteries. Hopefully, this is more than just a pipe dream.

However, while QuantumScape continues to test its batteries, QS stock continues to test investors’ patience. Along the way, traders sometimes get lucky with short squeeze plays. If your time frame extends beyond a few days or weeks, though, it’s important to understand QuantumScape’s limitations, which are considerable.

QS Stock Has a History of Pops and Drops

If you’re only seeking quick returns on a short squeeze play, feel free to research QuantumScape’s short interest ratio. It’s high, yes, but it remained high throughout 2022 while QuantumScape’s investors continued to lose money.

Consider that, since the massive short squeeze in late 2020, every single pop in QS stock was soon sold off. So, there’s an important lesson here. If you’re counting on Reddit traders to sustain a stock for the long term, you’ll likely be disappointed.

And if you’re relying on updates from QuantumScape to keep the shares afloat, don’t hold your breath. The company hasn’t provided any significant operational updates since QuantumScape shipped out its 24-layer battery cells. That’s old news now.

QuantumScape Has a Poor Financial Track Record

Here’s something we can’t say about many well-known companies. Believe it or not, QuantumScape has managed to miss analyst consensus earnings per share (EPS) estimates for every single quarter since the company’s initial public offering.

That’s a rare feat, but not one to be proud of. QuantumScape’s next earnings event is set to take place on Feb. 13. Ask yourself: Do you really want to be invested when this happens, in a business with a “perfect” track record of EPS misses?

While you’re at it, consider whether you’re really ready to invest in a “pre-revenue company.” That’s a polite way of saying QuantumScape has no revenue – only visions of robust capital inflows at some point in the future.

Also, QuantumScape has incurred substantial net earnings losses, quarter after quarter. Meme stock traders might not care about that, but serious investors ought to.

What You Can Do Now

Think of QuantumScape as an early-stage business that’s developing solid-state batteries which could represent the future of battery technology. It’s exciting to consider the possibilities, and QuantumScape might deserve a hearty recommendation someday.

Today is not that day, however. If QS stock just popped, we can congratulate some of the lucky short-term traders. They should probably take profits while they have them. For the long term, QuantumScape is high-risk and hard to defend from a financial standpoint; it’s fascinating, yes, but not necessarily the best business to invest in today.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.