What happened
Shares of quantum computing pioneer IonQ (IONQ 2.82%) skyrocketed on Tuesday, boosted by a surprisingly strong earnings report. The stock closed Tuesday's trading 31.1% higher, having climbed consistently all day long.
So what
IonQ's second-quarter revenue landed at $2.6 million, compared with a mere $93,000 in the year-ago quarter. Order bookings rose from $57,000 to $600,000 over the same period. On the bottom line, net losses per share shrank from $0.08 to $0.01. Your average analyst would have settled for losses of roughly $0.10 per share on revenue near $2.4 million.
The company signed several sales agreements and research partnerships during the quarter, including paid computing contracts with airplane maker Airbus and chemistry giant Dow Chemical. These clients hope to gain unique insights from IonQ's quantum-based Aria computer, exploring problems that are difficult to solve with digital computers.
Furthermore, the Aria system boosted its computing power by adding three more qubit units. Aria now boasts 23 algorithmic qubits. It's not the largest quantum computer in the world, but IonQ doesn't have many rivals that actually sell computing time on their quantum systems. The company channels its quantum computing services through web-based portals on the leading cloud computing platforms.
Now what
Quantum computing is an exciting new field of discovery, and IonQ is an early leader in this space. The company and its stock offer massive potential long-term growth but also an oversize helping of market risk.
All things considered, I see IonQ as a speculative and overheated stock. Yes, share prices are down 15% from last summer's market debut, but the stock is also changing hands at an outlandish 260 times trailing sales. That risk-reward ratio is a bit too rich for my blood, and IonQ looks more like a lottery ticket than an investment so far.
