Quantum computing stocks have garnered significant interest this year.
Since 2024, these stocks have experienced a notable rise, fueled by growing enthusiasm for artificial intelligence (AI) and its intersection with emerging technologies like quantum computing.
While returns from quantum stocks remain minimal, there are remarkable technological developments taking place. For instance, Nvidia CEO Jensen Huang has expressed optimism about advancements happening sooner than anticipated. Additionally, Alphabet recently reported a breakthrough: quantum algorithms outperform traditional supercomputers by a factor of 13,000.
IonQ has positioned itself as a forefront player in the quantum sector, though its stock hasn’t performed as well as some competitors, such as Quantum Computing Co., Ltd.. Similar to other emerging tech stocks, IonQ has seen some pullback in recent weeks. But is IonQ a good investment right now? Let’s explore what this stock has to offer.
What you need to know about IonQ
IonQ employs a trapped ion methodology, utilizing ytterbium (Y) atoms to produce ions necessary for quantum bits. This approach distinguishes it from many competitors.
Interestingly, IonQ has started to see real revenue while remaining unprofitable. In the third quarter, its revenue soared by 222%, reaching $39.9 million, although it still reported a significant operating loss of $168.8 million.
For companies like IonQ, however, immediate numbers aren’t everything. The focus is on proving that their technology can deliver value to customers. This considerable revenue growth is a positive sign for IonQ.
Recently, the company announced collaboration with Oak Ridge National Laboratory to create advanced applications in energy and improve quantum workflows. It’s also partnered with a Swiss collective to establish the first city-wide quantum network in Geneva and signed a memorandum with the U.S. Department of Energy to further quantum technology in space.
IonQ has been active in acquiring companies to enhance its technology, recently buying Oxford Ionics and Vector Atomics. Additionally, it is targeting a goal of 2 million qubits and 80,000 logical qubits by 2030.
IonQ has raised its annual revenue forecast to between $106 million and $110 million. This suggests that the fourth-quarter projections will remain consistent with the third quarter, estimating $38 million to $42 million.
Key data points
Market capitalization: $17 billion
Current stock price: $49.30, with a change of 5.12%
52-week range: $17.88 to $84.64
Volume: 10 million
Average volume: 30 million
High-risk investment
Even with progress made by IonQ, its stock is still a high-risk investment. The company is anticipated to report an EBITDA loss between $206 million and $216 million. In fact, their operating loss for the first three quarters has escalated to $405.1 million, including a free cash flow loss of $208.7 million. This downturn is attributed in part to over $200 million in stock compensation costs.
On the brighter side, IonQ has a substantial liquidity position, with $1.08 billion in cash and short-term investments. The prevailing excitement around quantum computing should aid in raising additional funds if required.
Nonetheless, IonQ may be several years away from profitability, and its speculative status is reflected in a price-to-sales ratio exceeding 100. Despite a dip from its October peak, IonQ’s market capitalization stands at $16.4 billion.
If you’re interested in investing in quantum computing technology, IonQ appears to be the leading option among pure-play stocks. However, potential investors should be cautious as the current valuations are likely inflated by hype, meaning significant price drops could occur even if IonQ achieves its objectives.
