Quantum computing stocks, including Quantum Computing Inc. (QUBT), experienced a recent boost following Amazon’s (AMZN) advisory program announcement, Quantum Embark. The company is striving to be an affordable quantum machine provider. It continues to break new ground with its core portfolio, offering unique high-performance computing, AI, and cybersecurity solutions. Among the company’s recent strides are the significant progress of its U.S.-based Thin Film Lithium Niobate (TFLN) foundry and the renewal and extension of a research agreement with Los Alamos National Laboratory.
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Despite potential criticisms from short-selling firm Iceberg Research, Quantum remains confident in its strategic direction and financial stability. Given the 750% jump in the share price, investors might want to observe the company’s performance to verify that it is on track to live up to such a lofty valuation.
Quantum Computing Is Gaining Momentum
Quantum Computing specializes in integrated photonics, offering quantum machines that operate at room temperature and low power. Its technology and products are used in high-performance computing, artificial intelligence, cybersecurity, and remote sensing applications.
The company has made significant strides recently, particularly in establishing a U.S.-based Thin-Film Lithium Niobate (TFLN) foundry in Tempe. The project is currently in the final commissioning phase, signifying a crucial leap in extending Quantum’s capabilities and market reach.
Under the new leadership, Sales efforts reflect encouraging results as the company advances in securing offtake agreements for its chips and machine orders. With increasing interest from potential collaborators and clients, the company aims to deliver on its commitment to high-performance photonics technology by early 2025.
New and Existing Partnerships
During the third quarter, the company renewed its Cooperative Research and Development Agreement with Los Alamos National Laboratory, continuing a partnership focused on exploring the potential of the Dirac-3 quantum optimization machine. This collaboration aims to advance quantum solutions in multiple sectors, including energy grid management, social networks, and telecommunications.
Furthermore, the Dirac-3 platform has continued to gain momentum, displaying efficiency in solving complex computational problems through collaborations with National Laboratories such as Oak Ridge and Lawrence Berkeley. In addition, the company recently secured a fifth task order with NASA, underscoring its commitment to develop quantum remote sensing technology to reduce the cost of climate-monitoring missions and enhance data collection capabilities.
Quantum Computing’s Recent Financial Results
The company recently released results for the third quarter of 2024. Revenue reached approximately $101,000, notably more than the $50,000 generated in the same quarter of 2023. This rise is primarily attributed to ongoing progress in delivering a quantum LiDAR prototype for Johns Hopkins University. However, the gross margin shrank to 9%, down from 52% in the previous year.
Operating costs decreased 18% year-on-year, from $6.6 million to $5.4 million, demonstrating the company’s successful strategy in reducing general and administrative expenses, particularly employee and consultant costs. That said, the company reported a net loss of $5.7 million, an improvement from the $7.1 million loss recorded in the third quarter of 2023. Q3 GAAP EPS was—$0.06.
As of the quarter’s end, the company reported that cash and equivalents slightly increased to $3.1 million, boosted by successful convertible debt financing, which netted $7.0 million. However, total liabilities increased to $10.9 million, due mainly to the secured convertible debt financing.
Is QUBT a Buy?
The stock has seen a stratospheric rise this year, but not everyone is impressed. Iceberg Research, a firm known for short-selling, recently published a report expressing its doubts about the company. Iceberg has alleged that recent press releases favoring the company’s prospects were constructed around hearsay and speculation, further expressing skepticism towards Quantum Computing’s attempts to transition into a chip foundry.
Currently, no Wall Street analysts track QUBT stock, making it challenging to establish an authoritative rating based on industry expert opinions against which to judge Iceberg’s claims.
With a dark cloud of suspicion hanging overhead and the company yet to make a profit, it is hard to justify its premium valuation relative to industry peers. The company sports a P/B ratio of 9.2x, compared to the Information Technology sector’s average of 3.46x.
QUBT in Review
As Quantum Computing moves forward, maintaining an optimistic yet guarded outlook seems prudent for investors. The company’s recent strides underscore its potential, highlighted by the exponential growth of its stock following Amazon’s Quantum Embark advisory program. Developments within the TFLN foundry and the renewal and extension of a research agreement with Los Alamos National Laboratory signify a galvanized approach to delivering high-performance photonics technology.
However, caution should be exercised in light of contentions from short-selling firm Iceberg Research and the lack of authoritative Wall Street investors tracking QUBT stock.
