What happened
IonQ (IONQ -3.80%) stock got hit hard in Friday's trading. The quantum-computing company's share price ended the daily session down roughly 12.5%.
The market is once again bristling at high-risk stocks, and many growth-dependent technology companies are seeing their valuations crushed as investors analyze risk factors including the coronavirus omicron variant, rising Treasury bond yields, and uncertain monetary policy in 2022 and beyond. There doesn't appear to have been any company-specific news behind the big sell-off, but IonQ got caught up in the bearish momentum sweeping the broader market.
Image source: Getty Images.
So what
After a round of intense, omicron-driven market correction on Black Friday, stocks have once again closed out the week with a day of intense sell-offs. It's possible that the spread of the omicron variant will lead to more significant supply chain disruptions, and investors aren't liking the added source of economic uncertainty.
The tech-heavy Nasdaq Composite index closed out the day down roughly 1.9%, and it ended the weekly session down 2.6%. IonQ has yet to post significant revenue and was just taken public through a special purpose acquisition company (SPAC) merger, so it's not surprising that the stock's losses significantly exceeded the index's.
Now what
IonQ has a market capitalization of roughly $3.6 billion, and the company reported no revenue with its recently posted third-quarter results. The company has secured roughly $15.1 million in total contract value (TCV) bookings this year, and it expects to close out 2021 with TCV bookings of roughly $15.8 million. Based on that target, IonQ is trading at roughly 228 times this year's expected bookings.
The fact that the business isn't currently posting meaningful sales doesn't necessarily mean that the quantum-computing specialist won't be able to grow into and exceed its current valuation, but the dynamic predisposes the stock to be highly impacted by market volatility. It's also worth noting that IonQ faces some very tough competition from much larger competitors in the quantum-computing space. The potential for explosive growth is here, but investors should move forward with the understanding that IonQ looks like a very high-risk investment.
