IonQ (NYSE:IONQ) stock has been riding the quantum computing hype train at full speed, skyrocketing over 370% in just six months. As excitement builds around quantum technology’s potential to revolutionize industries, this sector has seen a whirlwind of momentum.
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IONQ isn’t just riding the wave – it has real achievements to back it up. The company boasts an impressive track record of technological breakthroughs and high-profile partnerships with industry giants like Amazon, AstraZeneca, and the U.S. Air Force.
But the rally hasn’t been without turbulence. Skepticism about quantum computing’s real-world viability – most notably from Nvidia CEO Jensen Huang, who questioned its practicality in early January – has triggered a 17% pullback in IonQ shares this year.
The question now is whether this is just a bump in the road or a reality check for the quantum boom.
While acknowledging these positives, one investor, known by the pseudonym DT Invest, is worried that the relatively young company will simply not be able to withstand the growing competition from much larger tech firms.
“IonQ’s $8 billion valuation is highly speculative, given its minimal revenue and deep losses amid fierce competition from tech giants like Google and Intel,” the 5-star investor opined.
DT points to Intel’s latest move – a partnership with a Japanese research center to develop next-gen quantum technology – as well as a Google-backed quantum startup securing a massive $230 million funding round. With deep-pocketed competitors expanding their quantum ambitions, the pressure on IonQ is only growing.
“I believe that competition in this industry is poised to only intensify further, which poses big risks for relatively small companies like IONQ,” DT adds.
Further sinking IONQ’s appeal for the investor, the company – which is burning through $20 million in cash per quarter – is not expected to have a positive EPS until FY2029. DT therefore believes that dilution will be coming down the pike, as the unprofitable company will find it difficult to obtain debt financing at reasonable levels.
In addition, past technological successes will serve as something of a double-edged sword, DT argues. Though the company’s ability to achieve milestones earlier than anticipated have likely helped push share prices higher, “not delivering on promises will likely lead to massive selloffs.”
Concerned about the high valuation, bloated Price-to-Sales ratio of over 200, and intensifying competition, DT Invest rates IONQ a Strong Sell. (To watch DT Invest’s track record, click here)
Wall Street, on the other hand, seems ready to place its faith in the company. With 4 Buy and 2 Hold ratings, IONQ enjoys a Moderate Buy consensus rating. Its 12-month average price target of $44.20 implies a 27% upside for the coming year. (See IONQ stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
