IonQ Stock Is Risky, But It’s a Worthwhile Quantum Computing Play

Stocks to buy

Maybe you don’t know much about quantum computing – that’s perfectly fine. You’re still invited to consider IonQ (NYSE:IONQ) as the company just recently went public and IonQ stock is now available for trading.

A digital rendering of a circuit board and digital chip in neon colors.

Source: Shutterstock

InvestorPlace contributor Ian Bezek put IonQ on his must-read list of seven computing stocks to buy. Bezek pointed out that the company is backed by a host of influential investors, even including Bill Gates.

On the other hand, he also observed that IonQ generated no revenues in 2020, and the company doesn’t forecast significant revenues in the near future. So, it’s probably fair to say that this would be a speculative investment.

Understand, though, that “speculative” doesn’t mean “bad.” If you believe that there are profits to be made in the quantum age, then stay tuned as there could be a ground-floor opportunity to spark your interest.

Introducing IONQ Stock

IonQ didn’t go public through a traditional initial public offering (IPO). Rather, the company took the special purpose acquisition company (SPAC) route.

After reverse-merging with dMY Technology Group III, IonQ offered its shares for public trading on the New York Stock Exchange on Oct. 1, 2021.

“IonQ’s listing today marks an incredibly significant milestone for quantum computing – the demand for this technology is real and the path to commercialization and scale is tangible,” declared Niccolo de Masi, CEO of the dMY Technology group of companies.

Despite de Masi’s confidence, IonQ stock wasn’t a huge winner at first. The stock started off at around $10, but sank to the low $7’s in just a few days’ time.

There are signs of a recovery, however, as the buyers pushed the stock price back above $10 in the second half of October. They even managed to get it up to $11 briefly.

A Unique Business

As of Oct. 21, IonQ stock was trading at around $10.30 and the volatility level was fairly subdued.

Nevertheless, new SPAC stocks can move quickly in both directions, so please be cautious. Volatility could return at any moment, and therefore small position sizing is the best policy. That having been said, there are factors that make IonQ interesting as an investment.

For one thing, the company received gross proceeds of $636 million from the SPAC transaction. So, IonQ should have plenty of capital available to fund its future growth.

Also, the accompanying press release asserts that IonQ became the first publicly traded, pure-play quantum computing company.

Furthermore, IonQ could be considered a trailblazer in quantum computing as the company has the world’s most powerful trapped-ion quantum computer.

A Market with Potential

Leveraging the power of ionized atoms means that IonQ’s computers “can perform longer, more sophisticated calculations with fewer errors than any quantum computer yet built,” the company claims.

In addition, Ion’s quantum computer features a capacity of 32 qubits, with minimal gate errors.

There’s no denying that quantum computing has vast potential for revenue generation. As IonQ explains, experts predict a total addressable quantum-computing market of around $65 billion by 2030.

Don’t expect the company to post impressive financial stats immediately, though. Bezek noted that IonQ envisions remaining free-cash-flow-negative through at least the year 2026. That’s a major concern, I’ll admit.

Yet, there’s good news to report as well. Not long ago, IonQ tripled its expectation for 2021 total contract bookings, from the company’s previously announced target of $5 million to $15 million.

Hopefully, IonQ will be able to leverage these bookings into a more favorable overall fiscal profile for the company.

The Bottom Line

Don’t expect safety if you’re planning to invest in IonQ stock. This is definitely a speculative wager on a still-emerging market. There’s room for growth and profitability in the quantum-computing market, however.

IonQ is an early competitor in this field and has an advantage in its exceptional quantum computing power. If this sounds intriguing to you, then you might consider a small position in this bold and ambitious tech upstart.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

Articles You May Like

3 Top Tech Stocks to Buy for Growth and Income
The Ingredients Are in Place for Gevo Stock to Ultimately Lift Off
Not since Americans came home from World War II has inflation run through the economy like it is now
Stop-Loss Orders: Using Stop Loss vs. Stop Limit?
Stocks making the biggest moves midday: Zoom Video, Best Buy, Abercrombie and more