D-Wave Quantum (QBTS +2.85%) went public through a merger with a special purpose acquisition company (SPAC) in August 2022. While the stock has been highly volatile across its public-trading history, it's still up roughly 143% since market close on the day of its debut. This performance comes in significantly ahead of the S&P 500's and Nasdaq Composite's respective total returns of 63% and 80% across the same stretch.
D-Wave's focus on quantum annealing technologies has seemingly given it an easier path to scaling commercialization, compared to some other players in the category. The company's valuation has seen strong bullish momentum over the last year as interest in quantum computing has surged. As of this writing, the stock is up 235% over the last 12 months.
Does D-Wave have what it takes to deliver 10x returns from its current pricing level, or is the stock already too richly valued?
Image source: Getty Images.
Is D-Wave's upside potential worth the risk?
With a market cap of approximately $8.5 billion, D-Wave is currently valued at approximately 335 times this year's expected sales. During this year's first three quarters, the business recorded revenue of $21.8 million -- representing annual growth of 235%. The company is aiming to deliver a radical shift in how computing is done, so investors can't rely too heavily on its valuation multiples and sales growth trajectory when valuing the stock.
NYSE: QBTS
Key Data Points
Instead of relying on the binary foundations that are at the heart of today's most powerful supercomputers, D-Wave is trying to be a top player in the rise of quantum technologies that move potential value states beyond simple ones and zeroes. Ironically, long-term investors in D-Wave stock may be looking at a binary outcome.
If D-Wave demonstrates that its tech represents the most reliable and cost-effective path to supporting real-world use cases for quantum computing, the stock has the potential to deliver returns far greater than 10x over the next decade. On the other hand, there's also a big risk of shares going to zero.
