Key Points
- Hitting milestones a few months early is a positive sign. But negative momentum might stay in the driver’s seat for a while longer.
- IonQ is a promising quantum innovator, but waiting for more of a pullback might be wise.
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It’s been a bloodbath for the quantum computing stocks in the last few sessions. With an impressive September of gains in the books, I think investors should be more cautious going into October, especially as some of the froth comes off the top of some of the market’s most explosive gainers. Indeed,IonQ(NYSE:IONQ) and the broad basket of quantum plays are on the rapid retreat right now, and the negative momentum seems to be so strong that even positive developments from IonQ were not enough to dampen the heavy blow that’s facing the shares of the quantum computing pure-plays.
In case you missed it, IonQ’s Tempo system has reportedly hit a major milestone three months early. With an algorithmic qubit score hitting fresh records, perhaps IonQ is the top quantum computing play to stash on a watchlist.
IonQ’s early milestones are impressive, but shares are still on the retreat
Indeed, the performance benchmarks seem to favor IonQ over some major rivals in the space. And while the breakthrough might suggest quantum advancement is further along than expected, I do think that even breakthrough good news might not be enough to move the needle as high, given the explosive run IONQ and other quantum computing stocks have been on of late. At the time of this writing, shares of IONQ are down more than 18% in just over a week’s time. Though being three months ahead of schedule is, undoubtedly, an impressive feat, valuation concerns could continue to be center stage, especially as investors get a bit jittery should a government shutdown set the stage for a bit of profit-taking in early October.
Though any potential U.S. government shutdown is sure to cause waves across markets, I wouldn’t make too much of the matter, especially when it comes to early-stage quantum innovators. If anything, a broad market sell-off might be a good thing for new investors with disposable income to take a chance in a speculative hyper-growth stock. At the end of the day, there’s a long road towards commercialization and eventual profitability. And I’m not so sure if most investors are willing to stay patient and ride out the bumps in the road. We’ll have to wait and see how IonQ fares against analyst estimates. If more milestones are poised to be achieved a few months earlier than expected, perhaps IONQ stock could become one of the more exciting speculative tech plays to watch closely.
IonQ is attracting a lot of quantum talent. That’s a big deal
With the acquisition of Oxford Ionics, IonQ also seems well-equipped to acquire more quantum talent from across the board. As Craig Ellis of B. Riley pointed out, IonQ is a master at “attracting senior blue-chip talent,” and with multiple closed deals in the past year, the company is moving really fast to advance its offering. When it comes to hyper-growth names that are a bit harder to value, perhaps going by the capabilities of management and their ability to attract top tech talent could be something to watch for.
In any case, investors should aim to play the long game with IONQ stock by being ready to nibble on weakness. Despite the rocky finish to September, the red-hot name is still up over 600% after its latest correction. The stakes are high, but for investors with strong stomachs, perhaps braving a continued dip is the best way to punch a ticket into a company that’s gaining serious traction in the quantum realm. Of course, it’s best to stay cautious with the name, given that it has been cut in half many times in the past few years.
So, is it time to buy? If you’re keen, I won’t stop you from initiating a tiny position at around $61 per share. However, I’d prefer waiting for a steeper pullback before entering. Either way, I’m in no rush, even though the latest developments are tremendously encouraging.
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