IonQ (NYSE:IONQ) stock is down about 7% today after Scorpion Capital released an 183-page short report on the company. IonQ operates as a quantum-computing company, claiming to have “the world’s most powerful quantum computer.” Last year, it also became publicly traded through a special purpose acquisition (SPAC) transaction.
However, through interviews with industry experts and former employees, Scorpion believes the company’s claims of a 32-qubit machine are a “brazen hoax.” The firm points out that past employees have stated the technology “doesn’t exist” and that “it was totally made up.”
Scorpion even goes as far as comparing IonQ’s quantum computer with Nikola’s (NASDAQ:NKLA) rolling truck catastrophe. The firm characterizes the quantum computer as IonQ’s “claim to fame as well as the basis of its SPAC.”
Shares of IONQ stock are down over 50% year-to-date (YTD). So, with that in mind, let’s get into the details of the short report.
Scorpion Capital Releases IONQ Stock Short Report: 11 Things to Know
- Scorpion believes that IonQ’s actual computer is an “old 11-qubit toy computer for demonstration purposes.”
- Furthermore, Scorpion states that quantum computers have remained a “science fiction fantasy” since 1980.
- Industry experts and former employees have stated the computer is “‘primitive” and “useless,” as well as “unreliable with low uptime.”
- Scorpion independently verified that IonQ’s 11-qubit computer “can’t even properly add 1 + 1.” The firm hired a quantum computing expert to run a script to see how often the computer would return the correct answer. Scorpion concluded that the “error rates were shocking.”
- A former IonQ executive told Scorpion that it is well-known inside the company that the 32-qubit computer doesn’t exist.
- Scorpion alleges that IonQ’s claims of the computer having commercial benefits are “outlandish.” Scorpion says that former employees disclosed the fact that customers were “paid to do deals.”
- Scorpion spoke to a few customers and partners of IonQ. The firm says “they each laughed at, mocked, or trashed IonQ’s capabilities – contradicting their quotes in IonQ’s releases.”
- On top of that, Scorpion states the company has “no meaningful intellectual property.” The firm believes IonQ obtained its quantum processing unit (QPU) chip from a third-party vendor operated by competitor Honeywell (NASDAQ:HON).
- IonQ CEO Peter Chapman claims to have education credentials from MIT, joining the MIT Artificial Laboratory at 16 years old. However, Scorpion believes Chapman is “misrepresenting” these credentials.
- Scorpion also characterizes Chapman as a “figurehead CEO” who has “no grasp of quantum computing.”
- Finally, Scorpion disclosed that it is short IONQ stock.
On the date of publication, Eddie Pan did not hold (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 InvestorPlace.com Publishing Guidelines.