Is IonQ Stock Still a Good Buy After a 225% Surge?
IonQ (NYSE: IONQ) has gained attention after an impressive rise of more than 225% this year. Investors are increasingly curious: is this a sound investment for the long haul? Let’s explore the company’s prospects.
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Understanding IonQ’s Business Model
Let’s delve into what IonQ actually does. The company specializes in quantum computing. According to its 2023 annual report, IonQ is dedicated to developing quantum computers that aim to address complex global challenges. They currently provide quantum computing hardware and ongoing support, while also enhancing their computational capabilities.
We are developing quantum computers designed to solve some of the world’s most complex problems, and transform business, society, and the planet for the better. Today, we sell specialized quantum computing hardware together with related maintenance and support, and are in the process of researching and developing technologies for quantum computers with increasing computational capabilities. We currently make access to our quantum computers available via three major cloud platforms, Amazon Web Services’ (“AWS”) Amazon Braket, Microsoft‘s Azure Quantum, and Alphabet‘s Google Cloud Marketplace.
IonQ earns revenue mainly from selling access to its quantum hardware. But you may wonder: what exactly is a quantum computer? Simply put, quantum computers are significantly faster and more powerful than conventional computers. They use advanced technology to enable quicker computations.
A caveat exists, however. Quantum computers are prone to errors; things like temperature changes and electronic interference can hinder their performance. This makes it challenging and expensive to produce them on a large scale. Yet, if stable and reliable versions are created, they could revolutionize various sectors, including healthcare and engineering.
Assessing IonQ as an Investment
The hype around IonQ is understandable, but potential investors should tread carefully. IonQ is still early in its development phase, having reported just $37 million in revenue and over $171 million in net losses in the past year. Additionally, the company has a troubling free cash flow of negative $120 million, which translates to about $30 million in cash spent each quarter. Fortunately, it holds over $365 million in cash, allowing some runway before it needs more funding.
Investors should weigh the risks and rewards of holding IonQ stock. There is considerable upside if the company continues its research successfully. However, the uncertainties surrounding quantum technology and the company’s current losses make this stock a risky venture. It may appeal more to growth investors who are willing to take chances, while those who prefer safer investments might want to seek alternatives.
Should You Invest $1,000 in IonQ Right Now?
Before making any decisions, consider this:
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If you had invested $1,000 in Nvidia when it made the list on April 15, 2005, it would have grown to an astonishing $885,388!
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
