Much has been made of how quantum computing has taken the stock market by storm in recent months, with the Financial Times and others reporting on the trend recently as IonQ went public and Rigetti Computing announced a $1.5 billion merger with a special purpose acquisition company to do the same.
Companies with quantum buzz around them, such as IBM and Honeywell, the latter of which is in the midst of merging its quantum business with Cambridge Quantum, also seem to enjoy a little boost when their quantum efforts make news. No wonder IQT has a Quantum Stock Zone right on its homepage (Look down to the lower right of the page–we’ll wait…)
Arguably quantum stock haven’t even hit the market in a big way just yet. Surely, there will be many more to come, so it’s a good time for quantum firms to understand that there will be days like Monday, when a bit of negative news or a less-than-effusive analyst rating briefly throws water on all the excitement.
In this case, Goldman Sachs initiated coverage of IonQ, which went public in early October, with a “Neutral” rating and a price target of $28, a level where the stock hovered last week. This suggests the stock is fairly priced, and not without a potential for future growth.
According to a Seeking Alpha report, Goldman Sachs analyst Toshiya Hari, also called out “a high level of uncertainty around widespread adoption [and] commercialization of quantum computing” and a current lack of visibility into IonQ’s roadmap and the timing of eventual broader market adoption of quantum computing.
Such comments should come as no surprise to anyone who has been working in the quantum computing space for any length of time. There has been rapid and real progress toward establishing the quantum computing market in recent months, but many key innovations needed to help the market explode are still some years away.
But on Monday sellers appeared to take the Goldman report as a cue to take some profits. IonQ’s stock price slid more than 14% during the trading day from around $28 to under $23 around mid-day, before ticking back upward later in the afternoon.
All of this comes a week after IonQ posted its first earnings report as a public company. As InvestorPlace pointed out late last week, IonQ delivered the type of numbers one expects to see from an emerging firm–revenue of only $233,000, a sizable loss against expenses and negative EBITDA (although cash in hand of $587 million as of September.) Even InvestorPlace noted at that time that after the stock had surged during the first half of November that it might be profit-taking time for investors. So, maybe IonQ can now brag its getting the full stock market experience of surges and dips, and all the attention they bring.
Also, it’s worth noting that the down day for IonQ comes about seven months after Goldman Sachs and QCWare issued research suggesting financial services firms could be able to leverage quantum computing for advanced calculations within five years–a report that at the time was greeted as a huge positive for the sector.
So, what we’re saying is: Don’t hate the player, but don’t hate the game either. Going public is and will be a tremendous opportunity for quantum companies to help fund their ambitions and grow their profiles–if and when they are ready. Days like this are all part of the deal.
…One more thing here, an interesting and maybe even funny footnote: Even as a Goldman analyst posts some sober words about a newly-public quantum firm, Goldman the investment bank isn’t sitting on the quantum sidelines. The company recently worked with QCWare and another company on a proof-of-concept showing how quantum computing could be applied to Monte Carlo simulations. That other company was IonQ.