IonQ Is A Very Risky Stock

Bullish Studio

IONQ stock analysis.  Join 9,000+ investors: https://www.overlookedalpha.com  Quantum computing company IonQ is up 350% year to date.  #ionqstock #stocks #investing #overlookedalpha

Transcript

00:00 Quantum Computing Company IonQ has had an incredible year so far with the stock up 350%.

00:08 Despite that, shares are still down more than 50% from their peak.

00:12 At the latest share price, IonQ has a market cap of $3.2 billion.

00:17 It's got $526 million of cash and investments and no debt which means the enterprise value

00:22 is $2.6 billion.

00:24 However, IonQ is in its early stages.

00:27 Revenue for 2023 is expected to be only $19 million.

00:32 That means the stock is valued at a staggering 137 times revenue.

00:36 And unsurprisingly the company is not profitable.

00:39 Net income over the last 12 months was -$72 million and free cash flow was -$58 million.

00:46 An investment in IonQ requires some understanding of quantum computing and the likelihood of

00:52 the company becoming a leading player in the industry.

00:55 Quantum computing harnesses the laws of quantum mechanics to solve problems that are too complex

01:00 for classical computers.

01:03 While classical computers deal in noughts and ones, quantum computing relies on groups

01:07 of qubits that create more complex, multi-dimensional spaces.

01:12 The significant processing power from quantum computing has the potential to change the world

01:17 and its applications are widespread from speeding up the discovery and development of new drugs

01:23 to improving existing technologies like batteries or inventing entirely new technologies that

01:29 we can't even comprehend yet.

01:31 However, a great deal of caution is needed.

01:33 While some experimental quantum computers have been developed, we're still a long way

01:38 from seeing a fully developed and commercial system.

01:41 IonQ states in its own filings that the company has not yet produced a scalable quantum computer

01:48 and even if it's able to do so, there's no guarantee that the computer will be a) useful

01:53 or b) commercially viable.

01:55 For IonQ to be a success, the company needs to hit the quantum advantage, which is the

02:00 point at which quantum computing overtakes classical computing and it's not clear the

02:06 company is anywhere close to this goal.

02:08 There are also many companies competing in this space with big pockets and these companies

02:13 are all attacking the problem in different ways.

02:16 Google and IBM are reportedly using superconducting qubits, IonQ uses trapped ions and Q-era uses

02:24 laser pulses.

02:26 Quantum computing is a cutting edge but unproven technology that requires deep expertise and

02:31 technical understanding.

02:32 But essentially, IonQ is not really a business in its current form.

02:37 Its operations are focused on developing a quantum computer and proving that it's possible.

02:43 The company is a long way from providing a truly scalable product or service.

02:48 This is more like a science research project that is being funded by public market investors.

02:54 And so, just like an early stage biotech company that's attempting to prove a new drug, this

03:00 is an extremely speculative investment.

03:02 And for those reasons I give this stock a negative rating but these are my personal

03:06 opinions not financial advice.

03:09 For more detailed investing ideas make sure to visit our website overlookedalpha.com

Category

Transcript

Recommended