$QS

Pre revenue companies like QS regularly need external financing to keep operations going. When risk appetite is strong, they can usually raise this funding relatively cheaply through equity sales (secondary offerings/ATM programs) or more flexible, equity like instruments. Right now, risk appetite is weak. But if liquidity tightens and capital markets close to these kinds of companies, the option set deteriorates quickly: as access to capital worsens, the company either turns to more expensive and more tightly structured financings (like converts/PIPE/structured equity), or it increases dilution risk for existing shareholders by issuing shares at lower prices.
That’s why a liquidity squeeze creates an existential threat for companies like QS that still don’t generate consistent revenue. Profitable companies (like Apple or Microsoft) are relatively more resilient in a cash crunch because they generate cash from operations. For QS, the story is runway: for a company carrying a few hundred M per year in operating losses/spend, once access to capital deteriorates, time starts working against them.
When cash tightens or rates stay high, the dilution risk we call a death spiral can kick in. If the company can’t access credit or access becomes too expensive new share sales from depressed levels can become mandatory. This can create a self reinforcing spiral that pressures the price further while eroding the value of existing shares: as the price falls, more shares are needed; because more shares are needed, dilution grows; as dilution grows, the pressure on the price increases.
In today’s environment, the main factor squeezing companies like QS is the cost of money. If rates stay high, it creates pressure through two channels. First, valuation: in growth companies, value is calculated by discounting future cash flows back to today; the higher the discount rate stays, the more the present value of distant future cash mathematically erodes, and this flows directly into market cap. Second, financing: if the company has to rely on external funding, debt/hybrid financing costs are usually tied to the base rate; the longer higher for longer lasts, the more these costs become a burning burden on the balance sheet. The key distinction here is this: for pre revenue companies, straight debt may not always be an easy option; in practice, the more common route is structured equity like solutions or convertible instruments that carry dilution risk. No matter which tool is chosen, as the cost of capital rises, the company’s bargaining power weakens.
Another macro effect is the demand channel. High rates can reduce end consumer appetite for buying vehicles by making auto loans more expensive. When EV sales slow, the likelihood increases that OEMs delay new technology investments and ordering appetite. That extends the time to revenue for companies like QS: as customers feel less urgency, the technology validation and scaling timeline stretches out.
In short, this regime where money is expensive and scarce is a durability test for unprofitable tech companies. What will determine whether QS gets through it is how disciplined it is in managing its cash reserves, how smartly it uses the capital access window when it opens, and most importantly whether it can keep its technology/milestone timeline moving forward without delays.
On top of that, right now there’s also a liquidity fear in the market due to private credit companies like Blue Owl.
It filled the gap it left in July...