quantum landscape (NYSE:QS) is now well off its highs, trading at $17.30 per share as of Thursday, January 20. A month ago when I wrote about QS stock it was at $23.57 per share. As a result, Quantumscape fell from $6.27 per share to $17.30, down 26.6% last month.

At the time, I wrote that Quantumscape, the maker of lithium metal batteries, was a good deal. As a result, that makes it an even better investment this month. After all, since closing at $22.19 on Dec. 31, QS stock is already down 22% since the end of 2021.

As a result, QS stock is likely to be quite volatile, especially until the company starts recording earnings.

Where are things for Quantumscape?

Investors still seem to be worried that Quantumscape won’t start generating revenue until 2024 with its existing solid-state battery technology. This is based on page 28 of the company’s September 2020 investor presentation.

Based on those projections, which don’t appear to be in its August 2021 investor presentation, the company will only have $14 million in revenue by 2024. Then, in 2025, its projection is $39 million. of dollars.

In fact, it’s not until 2026 that Quantumscape will achieve truly significant revenue. The 2020 presentation shows that its forecast for this year calls for sales of $275 million. The problem is that it’s still five years away.

That’s a long time for Quantumscape investors to wait for any kind of financial outlook for the company. This likely explains the high volatility in QS shares, at least over the past few months.

Switch to stationary energy uses

On January 13, Quantumscape announced a new partnership that will see it produce batteries for more than electric vehicles (EVs). His agreement with Florence Energy (NASDAQ:FLNC) will allow it to present its solid-state batteries for stationary energy storage applications.

This is a brand new area that will open vast markets for Quantumscape, including utilities (battery storage on the power grid). Both companies will validate and test QuantumScape solid state battery cells for use in Fluence’s stationary storage products.

Like Barrons points out that batteries are also used by utilities to help make renewable energy generation available 24/7 by storing wind and solar energy.

Moreover, based on recent studies, the market for stationary energy products could reach $385 billion by 2030. If the company can secure even a 1% share in this business, its annual revenue will be $3.85 billion. This goes a long way to justifying Quantumscape’s $8.24 billion market capitalization as of January 20.

Valuation of QS shares

For example, let’s say it can produce $5 billion in stationary energy sales by the end of 2030. Including 2022, which is nine years from now, and at an annual discount rate 10%, the present value factor is 42.4%. This implies that the present value of $5 billion nine years from now is $2.12 billion today.

As a result, this puts the stock on an adjusted price-to-sell (P/S) multiple of just 3.88 times. It also doesn’t include its expected revenue from electric vehicles at the time.

According to its 2020 slideshow, the company expects revenue of $6.49 billion by the end of 2028, seven years from now. With a present value factor of 51.31%, the present value of this EV revenue is $3.33 billion. Thus, including the $2.12 billion in stationary electricity revenues, the total present value is $5.45 billion.

As a result, the P/S multiple of present value is only 1.5 x sales. It is a very cheap price. Admittedly, this involves a lot of projected revenue and major assumptions.

For example, if we set the discount rate to 15%, the present value of the two revenue streams is $3.86 billion ($1.42 billion for the stationary part and $2.44 billion dollars for electric vehicles). This brings his P/S ratio to 2.13. time. It’s still very cheap.

Where does that leave investors in QS shares

Ultimately, if you can handle the volatility, QS stocks look pretty cheap here. The fact that the company is now expanding into a new revenue line could help it generate revenue sooner than electric vehicles.

It could also help reduce volatility in the stock going forward. Nevertheless, investors in QS shares are going to have to be patient. They should expect a bumpy ride, but at least the company is trying to make its future revenue streams more secure.

As of the date of publication, Mark R. Hake did not hold any position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and execute the Guide to Total Return Value that you can see again here.