While 2024 offered investors a number of stock splits, notably fewer tech companies have elected to split their stocks this year. But with the market's seemingly unyielding enthusiasm for quantum computing propelling many tech stocks sharply higher in 2025, it's reasonable to wonder if stock-split activity may soon resume.
Over the past year, for example, Quantum Computing Inc. (QUBT 1.21%) stock has soared more than 70%. Will it split its stock in the near future?
Let's dig a little deeper to see how likely it is that Quantum Computing makes its way onto the stock-split calendar.
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A deal with NASA had investors over the moon
Although Quantum Computing stock logged some significant gains over the past year, much of the rise occurred in late 2024. In December, Quantum Computing announced that NASA's Goddard Space Flight Center had awarded it a prime contract for its entropy quantum optimization machine, Dirac-3, to support NASA's imaging and data processing demands.
NASDAQ: QUBT
Key Data Points
The award spoke to the commercial viability of the company's quantum computer, and investors celebrated the news. Shares closed 53% higher the day after the company made the announcement.
Besides specific company developments, Quantum Computing stock benefited from the tide of analysts' bullish sentiment for the quantum computing industry, which has lifted many of the company's peers. In September, for example, Lake Street initiated coverage on Quantum Computing stock, assigning it a buy rating and a $24 price target, which represented more than 35% upside from the stock's previous day's close.
You don't need a quantum computer to calculate the likelihood of a Quantum Computing stock split
Among the many factors that drive investors' interest, potential stock splits rank at the top. They believe that if they can acquire shares prior to the stock split (with respect to forward stock splits at least), they'll be in a more advantageous financial position, with the greater number of shares they then own after the split is completed.
Savvy investors, however, recognize that the logic underlying this belief is faulty. Think of your upcoming Thanksgiving dessert. If you divide a slice of pecan pie into three smaller slices, you won't have three times as much ooey, gooey deliciousness as your original slice. Similarly, you will own more shares after a forward stock split, yet the value of your investment won't change.
So why would a company split its stock? There are several reasons, but the most common motivation is that management deems a stock's price has climbed to a point that may preclude investors from buying a single share.
With this in mind, investors who are digging into Quantum Computing stock will likely recognize that with shares rising as high as $27 over the past year and trading around $10 as of this writing, the odds of management choosing to proceed with a stock split are extraordinarily low.
A stock split is unlikely, but does that mean investors should pass on a Quantum Computing investment?
Since it seems highly improbable that Quantum Computing management will proceed with a stock split, is now a good time to load up on Quantum Computing stock? Because the company doesn't generate positive net income, using the price-to-earnings ratio is meaningless. On the other hand, the company is generating revenue, so the price-to-sales ratio provides some insight into the stock's valuation.
Changing hands at 2,500 times trailing sales, shares of Quantum Computing are anything but inexpensive. When juxtaposing Quantum Computing's price tag with those of its quantum computing peers, the stock appears even more expensive. IonQ stock and D-Wave Quantum stock, for example, are trading at price-to-sales multiples of 129 and 246, respectively.
Questions about the stock split aside, shares of Quantum Computing appear pricey right now, and investors seeking industry exposure may prefer one of the company's peers or consider investing in a quantum computing ETF to reduce their risk exposure.
