- IONQ Inc (IONQ) is at the forefront of quantum computing, a revolutionary technology with massive implications for everything from AI to cryptocurrency.
- IonQ is projecting 2022 revenue to be five times 2021’s and has signed several high-profile deals this year.
- Despite a post-earnings rally, IONQ stock is down 22% in 2022, and off its November 2021 high by 56%, offering a buying opportunity.
Quantum computing pioneer IONQ Inc (NYES:IONQ) reported its full-year and fourth-quarter 2021 results last week.
The startup just began publicly trading 13 months ago after a SPAC merger. IonQ delivered an impressive year, topped by a Q4 that had the market taking notice. Full-year revenue of $2.1 million beat the company’s own targets by 31%. For the fourth quarter, the $1.6 million in revenue was 50% over expectations.
Contract bookings were another strong sign that IonQ is on strong path. Last September, the company revised its initial estimate for contract booking for 2021, tripling the forecast to $15 million. The company ended up beating the revised forecast as well, ending 2021 with $16.7 million in contracts.
These are early days, so the company still reported a net loss of $106.2 million for the year, with a loss of 39 cents per share for the quarter. However, IonQ has $603 million remaining in cash, cash equivalents and investments.
Market reaction to IonQ’s earnings was positive. IONQ stock is currently in a three-day rally that has seen it gain nearly 7%.
Quantum Computing Will Be Huge
Before returning to IonQ specifically, it would be a good idea to take a closer look at quantum computing, because it can be confusing.
Traditional computers use transistors to perform calculations using bits, which can represent a one or a zero. Quantum computers use properties of quantum physics to perform calculations. Instead of bits, they use qubits, which can represent both one and zero at the same time. Quantum computers are incredibly powerful and well suited to data analysis and simulations. To remain stable and reduce errors, quantum computers must be operated at extremely cold temperatures.
Operation limitations and relative strengths mean that quantum computers won’t replace traditional computers for all tasks. No one is going to use a quantum computer to run Microsoft (NASDAQ:MSFT) Office, for example. But quantum computing has massive potential in areas like artificial intelligence. It threatens to smash current encryption methodology — which has huge implications for cybersecurity and cryptocurrency. There are applications in finance, engineering and other areas as well.
University of Washington chemical engineering professor Jim Pfaendtner says that Moore’s Law (that computers will double in computation power every two years) will be thrown out the window. In a 2021 interview, he explained how quantum computing will change everything: “You’ll have a radical change in the type of a certain class of calculations—the scaling is massively higher … So the number, the extent of calculations that you can begin to conceive of doing will really change overnight if this technology comes to pass.”
As reported in the Harvard Business Review, there are projections that quantum computing could be a $1 trillion industry in coming decades.
IonQ Is An Industry Leader Showing Massive Potential
IonQ stock is cheap considering the potential value of quantum computing. The key to IonQ is that its potential isn’t theoretical. It is the world’s first pure play quantum computing company. IonQ’s Aria quantum computing system is in its second generation.
The company’s latest earnings show that it is making headway in commercializing this technology. Part of leaving its revenue targets in the dust involves deals signed with some very high profile customers. This includes a partnership with auto maker Hyundai (OTCMKTS:HYMTF) to advance next-gen EV batteries using quantum computing, and an agreement with Microsoft to add IonQ Aria to Microsoft’s own Azure Quantum platform.
Should You Buy IONQ Stock?
Quantum computing is in its infancy, but at this point IonQ has the world’s most powerful quantum computer in the Aria. And it is making big strides in commercializing the technology. The company is still in the money-losing stage as it scales up and continues to develop its Aria system. However, IonQ has plenty of cash on hand, and it’s signing up big name customers.
IONQ stock earns a “B” rating in Portfolio Grader. Still down for 2022, it offers an opportunity to be an early investor in what is playing out to be a significant long-term growth industry.
On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.