Is Bill Gates Investing In IONQ?

It’s rare for a technology to be so disruptive that it has the potential to change the very fabric of how computers operate.

But every few generations, some truly transformative technology comes along, whether it’s the Internet a few decades ago to get us online or social media more recently to connect us all.

In the next few years, quantum computing holds promise to be that kind of revolutionary technology that changes our lives forever. And some real heavyweights from Silicon Valley and beyond have backed a single company, IonQ (NYSE:IONQ).

Is Bill Gates Invested In IonQ?

IonQ develops quantum computing systems and sells access to them based on qubit capacity.

These systems are accessible via Amazon Web Services (AWS) and Microsoft’s Azure Quantum, as well as Google’s Cloud Marketplace. So, while IonQ may not be a household name, it has got some seriously well-capitalized corporate partners.

Beyond enterprise partnerships with tech titans, Amazon, Microsoft and Alphabet, IonQ has also attracted interest from some of the most successful technology CEOs in history. If you’re wondering is Bill Gates invested in IonQ? Yes, he is, and so too is Salesforce CEO, Mark Benioff, as well as Dell founder, Michael Dell.

So, what is it these industry goliaths see in IonQ that has got them excited?

Is IonQ a Good Stock To Buy?

Before we delve into that, we need to emphasize that IonQ share price traded at around $3 per share in early 2023. Prior to the fourth quarter having been reached, the share price had soared to $20 per share.

A conventional analysis will not reveal the reasons for the monumental move, up 468% for the year. Still, if all you looked at were revenue growth rates, you could be deceived into thinking the trajectory of revenues was out of this world. Over the past 3 quarters, they registered at 131%, 119%, and 111.5%.

The 3 quarters prior to those saw revenues spike by 1,462%, 2,704%, and 1,085% year over year. But close scrutiny of the numbers reveals the reality that revenues have been minuscule, and so annual comparisons are off tiny bases.

Four quarters ago, revenues were reported at just $2.8 million while in the most recent quarter they came in at $5.5 million. Not exactly the type of numbers to command a market cap just shy of $4 billion, are they?

And yet that’s precisely the market cap of IonQ currently. To give you an insight into how large that is, RH, the retailer with $800 million in quarterly revenues has a market cap of $5.8 billion and Crocs, which just posted quarterly revenue of $1.072 billion has a market cap of $5.7 billion. 

Of course, the comparison between a technology company and a couple of retailers is apples to oranges when comparing business models but when we look to the pure financials, the retailers make approximately $1 billion more per quarter than IONQ yet are valued at about $1 billion and change more.

So to the question is IonQ a good stock to buy? Only if it realizes its potential to truly transform modern day computing. If it falls any way short, expect a massive correction in share price to the low single digits.

Is IonQ Overvalued?

It naturally makes sense to wonder whether a company making virtually no revenue compared to its valuation is frothy, or in other words, is IonQ overvalued? Surprisingly, the answer is perhaps not.

If IONQ can truly realize its potential, it could transform modern computing forever. And as we know that’s a really large market. 

What’s impossible at this stage is to evaluate IonQ based on its financials alone, however. The company is trading on expectations of landing contracts in the future, not its present revenues or profits.

The company has a who’s who of top brass technology leaders on its board, and backing it, so it would be a brave investor who took the other side of the bet.

Nonetheless, IonQ is not a stock for the faint of heart. It has already brought investors on a tumultuous ride and you can expect that won’t end anytime soon, particularly given its solid financial footing.

Sure, it doesn’t have material revenues yet but its balance sheet is a thing of beauty, sitting with $14 million in cash and $361 million in short-term investments. The company has virtually no debt to speak of, just $6 million.

At present levels, analysts do believe IonQ is somewhat overvalued and have placed a consensus price target of $17.80 per share on it. 

We struggle to get much above $14 per share running our own financial models, suggesting downside risk of as much as 26%.

Wrap-Up

IonQ is a company with the potential to disrupt modern day computing and has a valuation that reflects that expectation. 

Some investors have wondered is IonQ making money to deserve a multi-billion dollar market cap and the short answer is no, the revenues of $5 million per quarter don’t justify the valuation.

However, IonQ should be looked at more like how a call option is valued. If the company’s ambitions are realized it is almost certainly undervalued at this time. Anything short of perfect execution, though, will likely send IONQ share price crashing back down to earth.

IonQ has been a volatile stock for some time and promises to be so for the foreseeable future, too. If you’re going to make a bet on a life-changing technology, this may be the one to line your portfolio with profits, but remember it could all go up in smoke so tread carefully.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.