It’s safe to say that those investing in Quantum Computing (NASDAQ:QUBT) are placing their bets on the future. And while that’s true of most investments to some degree, QUBT’s negligible Q4 2024 revenue makes the point especially clear.
Like many of its quantum peers, QUBT went on a rabid bull run last year as overall excitement regarding quantum technology entered a feeding frenzy. The stock shot up by over 2,000% in the last two months of 2024.
The hand that giveth, taketh away, however – and QUBT has lost more than half of its value since the beginning of the year amidst rising doubts regarding the near-term practicality of the technology.
Still, QUBT bulls can point to the company’s progress making quantum technology available to address real-world issues. Supporting this optimistic take, the company’s Dirac-3 machine can operate at room temperature and requires significantly less power than other quantum machines.
However, while acknowledging QUBT’s technological advances, investor Michael Wiggins De Oliveira wants to see more evidence that the company’s $1 billion valuation is truly justified.
“At the end of the day, Quantum Computing is still more of a concept than a business,” explains the 5-star investor.
On the upside, QUBT isn’t in immediate financial danger. Despite burning around $6 million a quarter, the company has enough cash to keep operating for years – a cushion that represents roughly 16% of its market cap. That buffer softens the bear case, but not enough to turn Wiggins De Oliveira bullish.
“Sure, they’ve got cash and an interesting technology, but the revenue growth just isn’t there, and the valuation is far too rich for my liking,” Wiggins De Oliveira opined.
Adding to his reservations, QUBT has been aggressively issuing new shares early in 2025, increasing its share count by 46% in just a few months. The investor fears that more capital raises in the years to come might be necessary before the company is able to stand on its own.
“With heavy dilution and a long road to real profitability, I can’t justify holding on to this stock,” concludes Wiggins De Oliveira, who rates QUBT shares a Sell. (To watch Michael Wiggins De Oliveira’s track record, click here)
At this point, QUBT flies under Wall Street’s radar, with no analyst reviews to its name, suggesting that the broader market has yet to be convinced of the stock’s merits.
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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.
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