Why Did IONQ Go Up?

IonQ Inc (NYSE:IONQ) stock has been a heavy beneficiary of the increased attention that quantum computing stocks have received. While the stock is up just around 20% from its IPO in January 2021, IONQ stock has been on a remarkable rally. The company’s shares are up nearly 284% year-to-date.

IonQ has developed partnerships with Google, Amazon Web Services (AWS), and Microsoft that have increased exposure to IonQ’s platforms. The company increased revenue by over 100% in the first quarter of 2023.

But IonQ’s most powerful processors are still not available for widespread use. And the company’s net losses have increased dramatically year-over-year. The dramatic run-up will cause many investors to wonder if the stock can push any higher, or if it’s due for a slowdown until revenues pick up.

So is IONQ stock a buy?

What Does IonQ Do?

IonQ was founded in 2015 in College Park, MD by professors from the University of Maryland and Duke University. The co-founders built upon 25 years of computer science research to start IonQ and quickly entered into partnerships with Amazon Web Services (AWS) and Google to fund the company’s initial computer models.

Those partnerships have expanded over the years, even as IonQ raised funds through deals with other major brands like Samsung. IonQ makes its quantum computers available through the cloud via Microsoft Azure, Google Cloud Marketplace, and AWS.

The company also made a recent deal with United Emirates to explore how IonQ’s quantum computing technology can help give the country a technological edge. That coincides with another announcement that the company will partner with Fidelity to apply its computing solutions to Monte Carlo simulations.

Due to the highly successful deals the company has made, IonQ currently has a market capitalization of over $2.5 billion.

What Is a QuBit & Why Do They Matter?

IonQ offers quantum computing solutions in three separate models: the IonQ Harmony processor, the Aria processor, and the Forte processor. These models are differentiated by the amount of qubits they provide to perform quantum computing tasks.

A qubit (a term derived from a quantum bit) can be compared to the classical bit, a measure of a computer’s performance. But qubits can go far beyond what bits can achieve. The Harmony processors offer an #AQ (Algorithmic Qubits) of 9, a measure of quantum processors’ computing capability. This platform has been around the longest and is currently available through multiple cloud providers.

The IonQ Aria series of processors is much more powerful, with an #AQ of 25. But the platform is only currently available through the company’s proprietary IonQ Quantum Cloud.

The company’s Forte processor is IonQ’s most powerful offering, delivering an #AQ of 29. But access to the platform is only currently available to a select group of researchers and experts in the quantum computing industry. Even still, the #AQ 29 processor in the Forte platform was a massive achievement for the company, because it happened seven months earlier than expected.

IonQ Revenues Soar

The company reported higher-than-expected earnings of $4.3 million in the first quarter of 2023. This was a 115% increase from revenue of $2 million in the first quarter of 2022. The marked increase was due to customer activities that were executed earlier than expected.

The company also reported $4.1 million in new bookings in the first quarter. The increase in bookings and revenue triggered management to revise guidance for the full year of 2023, raising revenue projections from $18.8 million to $19.2 million for the year.

But the company still isn’t profitable. The net loss of $27.3 million was up over 500% from the net loss of $4.2 million in the first quarter of 2022. In spite of this, the company still has cash and cash equivalents of $525.5 million to draw on as it works toward profitability.

Analysts’ Ratings for IonQ

IonQ is still a favorite among analysts due to its unique potential, but the run-up has caused next-year forecasts to trend toward bearish.

4 out of 6 analysts rate the stock as a buy but the most optimistic forecast places IonQ at $13 for the year. On average, analysts estimate the share price will reach $10 over the next 12 months.

 The most bearish forecast has the stock dropping all the way to $7 over the next 12 months, around a 47% decline from where IONQ currently trades.

Is IonQ Stock a Buy?

IonQ is a quantum computing company that has strong partnerships with all of the major players in the tech industry and a platform that is poised to take the computing world by storm. Investors have bought into the company because they believe that quantum computing will become the industry standard in the years to come.

But IonQ isn’t profitable and its losses have increased year-over-year. The company’s most powerful products are still not widely available, and there are plenty of players looking to take their share of the industry.

IONQ still has plenty of cash on hand until revenues pick up. Analysts continue to rate the stock as a buy despite the meteoric rise IONQ has experienced over the past year. And even if the stock trades even or drops over the next year, IONQ is a long-term play for speculative investors who hope to get in on the ground floor of the computing technology of the future.

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