Quantum computing investors eager for more options are getting their wish. Special purpose acquisition company (SPAC) Crane Harbor Acquisition Corp. (CHAC +0.00%) announced Nov. 3 that it has entered into a business combination agreement with Xanadu Quantum Technologies. When the transaction closes, Xanadu will represent the only public pure play photonic quantum computing company.
While investors interested in initial public offering (IPO) companies will be keeping close eyes on the debut of Xanadu stock on the Nasdaq, shareholders of popular quantum computing stocks IonQ (IONQ 9.30%), Rigetti Computing (RGTI 8.94%), and D-Wave Quantum (QBTS 7.64%) will also want to keep close tabs on Xanadu as it moves closer toward its Nasdaq debut.
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Get to know Xanadu -- and take a stroll down PennyLane
It's not only the distinction of soon becoming the first and only pure play photonic quantum computing stock on the market; Xanadu also recognizes itself as the first pure play quantum computing company to achieve quantum supremacy. In essence, quantum computing is a feat achieved when a quantum computer solves a problem that classical supercomputers can't solve in any reasonable time frame.
NASDAQ: CHAC
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Xanadu claimed the title of attaining quantum supremacy in 2022 when Borealis, its 216-qubit system, demonstrated the ability to solve a complex challenge in 2 minutes compared to the 7 million years that the world's fastest supercomputer at the time would've needed to solve.
Projecting significant advances in the coming years, Xanadu believes it will have up to 100,000 physical qubits and up to 1,000 logical qubits in its fault-tolerant computer by 2029.
In addition to a quantum computer, Xanadu also has developed open-source software: PennyLane. Xanadu characterizes PennyLane as "the most implemented quantum programming platform in the world, in use by up to 47% of quantum programmers." And that's not the only way in which Xanadu distinguishes it. In the company's presentation regarding the business combination, it stated:
PennyLane's unique position as the front end application layer and OS [operating system] for quantum computers, along with its widespread adoption, and ability to be used across every modality means that investing in PennyLane means investing in the entire quantum industry.
In fact, the company opined that "PennyLane's monetization opportunity alone could warrant public company status."
Xanadu's financials are still shrouded in mystery
As a private company, Xanadu hadn't been held to the same financial reporting standards as those companies that are publicly held. With the company's announcement that it's proceeding with a business merger with SPAC Crane Harbor, though, investors may have surmised that they would gain some insight into its finances. It seems, though, they'll have to wait a bit longer. Although Xanadu provided an investor presentation along with the announcement of the merger, it failed to offer any details about its financial health, yet it did state that it expects to have a pro forma market capitalization of about $3.6 billion when it completes the merger.
Investors are merely left with the speculation of pundits. Business research consultant Intellectual Market Insights Research, for example, estimates Xanadu's 2024 revenue at about $6 million to $9 million. And since the company's early in its development, it's highly likely that it's operating at a net loss.
NYSE: IONQ
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What should IonQ, Rigetti Computing, and D-Wave investors do as Xanadu stock nears its debut?
Quantum computing investors may already be familiar with Xanadu considering its prominent position in the industry, and after learning that it was privately held, shifted to buying stock in IonQ, Rigetti Computing, or D-Wave Quantum. Now that it plans on becoming public, however, investors will soon have the opportunity to gain exposure to Xanadu.
Consequently, investors may find that shares of IonQ, Rigetti Computing, and D-Wave Quantum may experience some dips when Xanadu closed on its merger -- expected to occur in the first half of 2026 -- as investors move out of those positions and into positions in Xanadu. Should this occur, it's critical to remember that declines in these stocks are not indicative of shortcomings in their respective businesses but merely a result of the option to buy Xanadu stock.
