Tech Correction Puts IonQ Back in the Speculative Buy Zone

IONQ stock - Tech Correction Puts IonQ Back in the Speculative Buy Zone

Source: Amin Van /

IonQ (NYSE:IONQ) is an early-stage company focused on developing quantum computing technologies. Quantum computing, if it succeeds as envisioned, is set to reimagine the field altogether. It would be a massive leap forward rather than being just a small advancement to existing computational systems. Through complicated technical feats involving subatomic particles, quantum computing may be able to allow machines to make calculations at a rate thousands of times beyond where existing devices are today. This could totally reshape how humanity approaches complex fields, such as weather forecasting, computational chemistry, and pharmaceutical research.

By one estimate, the quantum computing space will be a $65 billion addressable market by 2030. There is a lot of variability to that estimate, given just how far the technology has to go before reaching scale. It is not hard to imagine the end market being much larger or smaller than that figure. Regardless, it gives you a sense of what the companies could be competing for. Sure, analysts forecast just $11 million in 2022 revenues for IonQ. However, anyone potentially interested in buying IONQ stock has to look at where the business will be in five or ten years, not where it is today.

How do things look as far as the future goes? IonQ has some tangible signs of progress to indicate that it is ahead of the field. For one, it is the only quantum system available on the three biggest cloud platforms: Amazon’s (NASDAQ:AMZN) Amazon Web Services, Google’s (NASDAQ:GOOGL) Google Cloud, and Microsoft’s (NASDAQ:MSFT) Microsoft Azure. For another, IonQ has partnerships with big names such as Hyundai (OTCMKTS:HYMTF), Goldman Sachs (NYSE:GS), and the University of Maryland. Finally, the company’s 2021 contract bookings, while still tiny in overall terms, came in far ahead of IonQ’s initial expectations, showing some operational momentum even at this early stage of commercializing the project.

The issue with all this, as it pertains to IONQ stock today, is that it will take years to play out. Analysts foresee $11 million of revenues in 2022, $18 million of revenues in 2023, and a decent jump to $47 million of revenues in 2024. Even assuming that solid step-up occurs, we’re still talking about a stock trading at well over 50x 2024 revenues at today’s stock price. In the current market where tech stocks are getting hammered, many traders aren’t going to stick around for a multi-year growth story that is still in its infancy. That being said, IONQ stock has now dropped back to around the $10 mark, where it originally debuted. For traders that missed the first surge in IonQ, this could be a second chance at the opportunity.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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