IonQ (NYSE:IONQ) has been at the center of the tech world’s excitement over advances in quantum computing. The promise of absurdly fast operating speeds – capable of tackling problems that would take standard computers septillions of years to solve – has not only captivated technologists but also thrilled investors.
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The company, which specializes in building quantum computing systems, has ridden this wave of enthusiasm to impressive heights, with its share price surging nearly 500% over the past six months.
However, IONQ can point to more than just industry-wide hype. The company has been able to achieve its product roadmap earlier than planned, while also inking partnership deals with AstraZeneca and Ansys.
On the financial front, IonQ exceeded its Q3 2024 revenue guidance, delivering $12.4 million compared to its forecasted range of $9 to $12 million. Additionally, with $380 million in cash reserves, the company is well-positioned to sustain its operations as it works toward profitability.
However, despite its achievements, IonQ continues to operate at a loss, which tempers the enthusiasm of some investors. Among them is JR Research, a 5-star investor ranked in the top 2% of TipRanks’ stock experts.
“We have no clear idea when IONQ will really turn free cash flow profitable,” JR noted, adding that “the risk/reward on IONQ is skewed so much to the downside.”
JR acknowledges the promise of quantum computing, yet points out that it is much too early to understand if these opportunities will be commercially viable. There is also no guarantee that IONQ’s tech will be superior to other competitors on the market.
According to JR, the recent surge in IonQ’s stock price has pushed the company into a high valuation territory, reflecting substantial market optimism about its technological potential. Nonetheless, JR warns that IonQ’s post-IPO history has been characterized by significant volatility, casting a shadow of uncertainty over the sustainability of its recent gains.
“It seems foolhardy (no matter how bullish you might be) to jump onto the bandwagon now, given the incredible rise over the past four months,” advises JR Research. Consequently, the investor rates IONQ shares as a Sell. (To watch JR Research’s track record, click here)
Turning now to Wall Street, investors are presented with a conundrum. On the one hand, based on 4 Buys and 1 Hold, the stock boasts a Strong Buy consensus rating. However, the $40 average price target suggests a potential 7% decline from current levels, likely a reflection of the stock’s rapid rise outpacing analysts’ ability to revise targets promptly. (See IONQ stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
