What happened
Shares of IonQ (IONQ 2.89%) sank 31.5% last month, according to data from S&P Global Market Intelligence. With the S&P 500 index declining 5.3% in January and the even more tech-heavy Nasdaq Composite falling 9%, it was a tough stretch for the market at large, and the quantum-computing specialist's stock lost nearly a third of its value.
IONQ data by YCharts.
Along with other macroeconomic factors, confirmation that the Federal Reserve plans to raise interest rates this year has caused the market to adopt a more cautious stance on highly growth-dependent and speculative stocks. Worrisome guidance from some big names in the tech sector added to investor concerns, and IonQ stock suffered a huge sell-off despite the company announcing an encouraging new partnership last month.
Image source: Getty Images.
So what
IonQ published a press release on Jan. 19 announcing it was partnering with Hyundai Motor Company to develop new quantum algorithms to study lithium compounds for battery technologies. The companies are betting that quantum-powered chemistry simulation will lead to significant improvements for next-generation lithium batteries. But the news seemingly had little impact on IonQ's stock price as rising bearish sentiment and aversion to growth stocks gripped the market.
Now what
IonQ has regained some ground early in February's trading despite ongoing volatility for the broader market. The company's share price is up 5% in the month so far.
IONQ data by YCharts.
IonQ now has a market capitalization of roughly $2.5 billion, and the company is valued at a whopping 408.5 times this year's expected earnings. This is a relatively young business that's still in its early stages and fresh off its public market debut.
The company went public through a merger with a special purpose acquisition company (SPAC) late in September, becoming the first pure-play quantum computing start-up to go public. The stock surged following its market debut, but shares now trade down roughly 68% from their high mark.
The stock could deliver huge returns for investors if the company manages to carve out a lasting position in the quantum-computing market, but it's up against resource-rich competitors in the tech space, and there's not much visibility on how the business will perform. It's probably fair to say that IonQ has a risk-reward profile that's fallen out of favor with investors right now, and shares could see more volatile moves in conjunction with shifts for the broader market.
