Today has been highly volatile for Arqit Quantum (NASDAQ:ARQQ). The quantum computing company is preparing for the expiration of its voluntary lockup, the period that allows for deals by investors holding at least 105.9 million shares. As a result, ARQQ stock plunged after markets opened, falling more than 10%. Since then, however, it has been slowly trending upward and is now down only 4%. Its current trajectory hints that it could easily pull back into the green before the end of the day.
Despite today’s initial plunge, ARQQ has displayed good momentum for most of the week and remains in the green for the past five days by more than 15%. Does this mean that the stock will continue rising after the lock-up period ends tomorrow, though? Let’s take a closer look.
What’s Happening With ARQQ Stock?
It’s true that ARQQ stock has risen more than 25% over the past month. However, the company is still recovering from the late April 2022 crash that pushed many stocks down and hasn’t displayed much growth until this week. Although Arqit briefly rallied in May on news that the White House would be taking measures to boost quantum computing, it has had no company-specific catalysts since then, casting the stock in a questionable light.
Now with the share lock-up period about to end, investors are left with even more questions. It’s common for the end of a lock-up period to push a stock down, but a rally before it expires is less typical and likely won’t last. As Seeking Alpha reports:
“Of the shares subject to lock-up deals,
officers, directors and employees. These are subject to black out period restrictions and can’t be traded till after ARQQ reports results for the year ending Sept. 30. 19.5M shares are held by two institutional investors, each of which have a representative on ARQQ’s board, and 16.8M shares are held by three institutional investors that were early investors in the company.”
The Sept. 30 date is an important one, as it may be followed by investors offloading shares. With shares being held by such a small group, any sales could push ARQQ stock down. There’s always the possibility that new investors will seize the opportunity to buy. That doesn’t seem likely when we take a macro look at the company, though.
What to Expect
Some would argue that names like ARQQ stock have a distinct advantage; they are part of a niche sector with incredible potential. According to InvestorPlace Senior Analyst Luke Lango, quantum computing is “the most underrated, most transformational technological breakthrough since the internet.” However, when Lango listed his picks for quantum computing stocks to buy for maximum growth over the coming decade, ARQQ was nowhere to be found. Arqit’s smaller-cap rival Quantum Computing (NASDAQ:QUBT) did make the list, though. Other experts have also omitted ARQQ from lists of top quantum stocks, highlighting QBUT and peer Rigetti Computing (NASDAQ:RGTI). When we consider the low price points that both stocks trade at, there’s no reason for investors to embrace ARQQ.
Arqit hasn’t received much analyst coverage, but Seeking Alpha has issued a highly bearish take. The platform gives ARQQ stock an F profitability grading, citing “inferior profitability and decelerating momentum vs. other IT stocks.” Tomorrow’s lock-up expiration isn’t likely to trigger any real momentum for a stock with limited growth prospects.
On the date of publication, Samuel O’Brient 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 InvestorPlace.com Publishing Guidelines.