What drove IonQ’s inventory surge in September? Discover out what a significant army contract means to this quantum computing pioneer.
Shares of IonQ (IONQ 0.54%) rose 17.8% in September 2024, in keeping with knowledge from S&P International Market Intelligence. The quantum computing pioneer was having a quiet month for probably the most half, however its inventory chart skyrocketed on probably game-changing information within the final week. That is the place IonQ signed a considerable contract with the U.S. Air Pressure Analysis Lab (AFRL).
Main army contract boosts IonQ’s analysis efforts
The AFRL deal is a four-year settlement value $54.5 million. It is IonQ’s largest contract of 2024, bringing the year-to-date order bookings to a complete of $72.8 million.
The corporate will collaborate with the AFRL to make quantum computing extra scalable and simpler to deploy. Quantum computing programs are essentially totally different from digital computer systems, making it troublesome to combine quantum programs with the prevailing digital infrastructure. Particularly, the 2 organizations will tackle compatibility with present networking infrastructure.
IonQ took benefit of this announcement’s media highlight, including loads of bullish boilerplate. CEO Peter Chapman reminded buyers that IonQ is rising sooner than every other pure-play quantum computing firm and highlighted the corporate’s growth offers with different teams. The press launch reads like a quick overview of IonQ’s enterprise prospects.
The inventory gained 28% over the subsequent two days.
Dangerous enterprise in an thrilling market
The AFRL contract is a giant step ahead for IonQ, and the quantum computing business ought to profit from this effort to combine new computing strategies with present applied sciences. On the similar time, it ought to be mentioned that IonQ stays a speculative funding with unsure long-term prospects.
The corporate reported a $49 million working loss within the second quarter of 2024 on $11 million in top-line revenues. I do know it is early, however that is not a sustainable enterprise mannequin in the long term.
It really works for some time when you have got stable money reserves, and IonQ is doing high quality from that perspective. The stability sheet has $370 million of money and short-term investments, principally culled from the preliminary public providing in 2021. On the similar time, the corporate is burning by that reserve with $124 million of detrimental free money move per yr.
The AFRL contract announcement had some uncomfortable overtones, too. For instance, the corporate introduced its high-octane progress in a slim context:
“No different publicly traded pure-play quantum computing firm has practically doubled income every year since going public,” Chapman mentioned. This assertion excludes the complete classes of privately held quantum computing consultants and bigger firms in lots of different enterprise areas. The corporate actually is outgrowing the remaining handful of rivals, however I feel it could be harmful to disregard the looming shadows of deep-pocketed tech titans.
And the inventory itself is dangerous enterprise. Share costs are nestled virtually precisely halfway between a 52-week low of $6.22 and excessive of $16.60 per share. Buyers are grabbing shares of a deeply unprofitable enterprise at 63 occasions gross sales.
Please examine your threat tolerance earlier than shopping for your first IonQ stub. Quantum computing could also be a game-changer, however there are safer and extra smart methods to take a position on this rising market.
Anders Bylund has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
