Stocks to buy

Why Risk-Comfortable Investors Should Take a Quantum Leap Into IONQ Stock

IonQ (NYSE:IONQ) soared from under $4 to over $14 this year. Its quantum hardware and accessibility on top cloud platforms garner attention from major players like Amazon Web Services (AWS), which added IonQ’s Aria to its quantum service, Braket.

IonQ’s pioneering quantum computing holds great promise but is not without risks. Explore the pros and cons to make an informed investment decision. The stock looks promising, but it’s always best to weigh the risks before investing.

The Fundamentals

IonQ’s Q1 2023 earnings report reflects strong year-over-year (YoY) revenue growth, jumping from $2 million in Q1 2022 to $4.3 million. Yet, R&D costs outpaced revenues, resulting in a net loss of $27.3 million, up from a loss of $4.2 million in 2022. While speculative, IonQ holds promise in the thriving quantum computing sector, making it a top contender among quantum stocks.

In Q2 earnings, revenue surged 111% YoY to $5.5 million. New bookings hit $28 million, adding up to $32.2 million in 2023. CEO Peter Chapman marked progress toward IonQ’s annual bookings goal of $49 to $56 million and “$100 million in cumulative bookings” within its initial three commercial years beginning in 2021.

The Pros and Cons

While not yet profitable, IonQ has secured substantial bookings for its quantum services, with Q1 2023 bookings at $4.1 million. IonQ’s growth trajectory is impressive, raising 2023 bookings expectations by over 25%, reflecting the strong market response with a surge in IONQ stock.

Investing in IonQ is promising but not without risks. The quantum industry’s future and competition from giants like Rigetti Computing (NASDAQ:RGTI) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) pose uncertainty. IonQ’s financials show ongoing losses, making profitability timing uncertain. IONQ stock investment demands faith in long-term growth and tolerance for short-term fluctuations.

IonQ’s high P/E ratio also raises concerns. Investors pay a premium for its growth potential, risking a significant correction if expectations aren’t met.

What Now?

IonQ’s global reach includes a partnership with QuantumBasel, launching an EU quantum data center. It’s a speculative buy for forward-looking investors in quantum computing and AI, offering potentially high returns with associated risk.

In summary, IonQ shows promise in quantum computing, but hurdles exist. The industry is young, profitability uncertain, and stock valuation is high. Investing in IonQ is intricate; it’s high risk with the potential for substantial gains or losses. It’s best suited for very risk-tolerant investors.

On the date of publication, Chris MacDonald did not hold (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 Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.