Shares of Quantum Computing Inc. (QCi) (QUBT +0.14%) were moving lower today as investors balked at a follow-on offering from the development-stage quantum computing company.
As of 10:56 a.m. ET, the stock was down 10.5% on the news.
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QCi serves up another dilution
Investors tend to dislike stock sales, as they dilute existing shareholders and show that management may fear running out of money.
In a press release last night, the company said that it issued an oversubscribed private placement of 37,183,937 shares of common stock, which is expected to generate gross proceeds of $750 million.
QCi expects to use those funds to fully fund the commercialization of its technology, pursue strategic acquisitions, improve production volume, and add sales and engineering employees, in addition to providing for working capital.
CEO Yuping Huang justified the move, arguing, "Total capital raised since November 2024 is now $1.64 billion, positioning QCi with the strongest balance sheet among publicly traded quantum computing companies and providing what we believe is sufficient funding to execute our current business plan through 2028."
NASDAQ: QUBT
Key Data Points
What's next for Quantum Computing Inc.?
QCi still generates less than $1 million in revenue annually, and it could be years before it produces meaningful revenue.
While leveraging its equity makes sense while the stock price is elevated and demand for new shares is high, the business is still unproven at this point.
With more than $1 billion in cash now and no debt, QCi should be able to invest in its growth as it sees fit, but the sell-off seems justified, as its market cap has already topped $4 billion, even though it barely has a product.
