No one is more aware of IonQ stock (NYSE:IONQ) stock volatility than IonQ investors. They have been whipsawed by the quantum computing stock since its public debut in October 2021 and which has been on a steady slide lower since last September.
That’s why investors should circle May 8 on their calendars. IonQ reports first quarter earnings that day and a lot is riding on the outcome. Disappointing news will send IonQ stock careening lower while a surprise will send shares soaring. Here’s a best guess at what IonQ stock investors can expect.
Growing but slowing
Even with the stock trending lower, there is a lot of hopium built into IonQ shares. The quantum computing stock trades at nearly 70 times the $22 million in annual sales it recorded last year. While that was double the amount notched in 2022, investors need to temper their enthusiasm that it will continue growing at that pace.
It ended 2023 with $65.1 million in bookings, which was at the high end of management’s guidance and 166% above the year-ago figure. However, it also said it expects to see $70 million to $90 million in new bookings in 2024. Even on the high side, that’s just 38% above last year. It hardly moves the needle on the low end.
Revenue is also forecast to be between $37 million and $41 million this year, up 77% year over year at the midpoint. And more important to the May 8 date, IonQ stock expects about $7 million in Q1 revenue, or 62% growth. Even so, IonQ is still a long way away from profitability. Losses are widening at a faster rate than revenue is growing.
While revenue grew 60% in the fourth quarter and doubled for the year, operating expenses surged 120% and 186%, respectively. Net losses exploded, growing 125% for the quarter and 225% for the year. It’s burning through cash rapidly as it tries to grow and fortunately has little to no debt to speak of.
But what the quantum computing specialist really needs to show if it wants to truly move its stock higher is that it can sell more hardware.
Sales are coming — eventually
IonQ announced it started construction on a new manufacturing facility in Seattle with the goal of delivering quantum computing systems to customers by the end of the year. It says the factory’s Forte #AQ 35 system output will seamlessly fit into existing data center designs.
The #AQ 35 benchmark is the total quantum computing power of IonQ’s systems. It means the Forte is capable of considering more than 34 billion different possibilities simultaneously. The goal is to eventually reach #AQ 64 status, which is where regular computers can no longer fully simulate an IonQ computer. CEO Peter Chapman told industry site HPC Wire, “My guess is that just like ChatGPT, the world will be like a baseball bat to their head, like, ‘Oh, my God quantum is here and why did I miss it?’”
But that won’t be happening any time soon, even if IonQ stock was able to achieve #AQ 35 faster than expected. And the factory won’t be having any impact on revenue in the first quarter. Investors will need to expect delayed gratification for any benefits to materialize.
Downside risk remains
Quantum computing, particularly in the age of artificial intelligence, looks like it will be the next stage of evolution. But it’s not here yet. There is likely to be a greater chance of investor disappointment in the first quarter earnings release than surprise, suggesting more downward pressure on the stock price is in store next month.
On the date of publication, Rich Duprey 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.
