Shares of QuantumScape Corp. (QS) tumbled 10.76% in after-hours trading on Wednesday, despite the company reporting better-than-expected second-quarter earnings and announcing an expanded collaboration with Volkswagen's battery maker PowerCo. The solid-state battery technology developer posted a loss of $0.20 per share, narrower than the $0.25 loss reported in the same quarter last year and slightly better than analysts' expectations of a $0.21 loss.

QuantumScape announced an amended agreement with PowerCo SE, a subsidiary of Volkswagen Group, to accelerate the commercialization of its QSE-5 solid-state lithium metal battery technology. Under the new terms, PowerCo will contribute up to $130.7 million over two years to support joint development and commercialization activities. The deal also grants PowerCo rights to produce up to 85 gigawatt-hours annually of battery cells based on this technology, with the potential for future licensing agreements.

The sharp stock decline comes amid a broader context of heightened volatility in so-called "meme stocks," with QuantumScape shares having surged over 200% in the past month prior to the earnings release. This recent rally was partly fueled by speculation and increased retail investor interest, reminiscent of the meme stock phenomenon seen in previous years.

Despite the after-hours plunge, QuantumScape reported improved financial metrics, including a narrowed full-year guidance for adjusted EBITDA loss to a range of $250 million to $270 million. The company also extended its cash runway guidance into 2029, a six-month improvement over previous projections. As QuantumScape continues to develop its innovative battery technology, investors and analysts will be closely watching for further progress in commercialization efforts and strategic partnerships.