QuantumScape (QS -5.66%) stock is being hit with big sell-offs Friday in response to bearish analyst coverage. The company's share price was down 6.3% as of 3 p.m. ET. despite the S&P 500 being up 0.4% and the Nasdaq Composite being up 0.3% at the same point in the day. The stock had been down as much as 11.9% earlier in trading.

Shortly before the market closed yesterday, Goldman Sachs published new coverage on QuantumScape and reiterated a sell rating on the stock. Despite some recent pullbacks, the company's share price is still up 127% this year.

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QuantumScape stock sinks following bearish coverage

With its coverage yesterday, Goldman Sachs raised its one-year price target on QuantumScape from $2 per share to $3 per share but kept a sell rating on the stock. Mark Delaney, the firm's lead analyst on the solid-state battery specialist, said he saw some encouraging signs with QuantumScape's new Cobra manufacturing process and the expansion of its deal with Volkswagen's PowerCo subsidiary, but he remained heavily bearish on the stock due to a belief that big risk factors facing the business aren't reflected in its current valuation. As of this writing, the investment firm's price target implies potential downside of roughly 74.5% for the stock.

What's next for QuantumScape?

QuantumScape's solid-state battery technologies have the potential to make big waves in the electric vehicle (EV) industry by offering superior charge capacity, faster charging, and safety improvements. On the other hand, it still remains to be seen whether they will actually wind up being brought to market and used by Volkswagen's PowerCo and other potential customers.

With its recent quarterly report, the company announced that it had secured a new deal with PowerCo worth $131 million and that it now had enough cash to fund its operations through 2029. QuantumScape stock could deliver huge returns if its solid-state batteries see market adoption, but the stock is a speculative play and could see big sell-offs if the company hits roadblocks on the path to commercialization.