Shares of Xanadu Quantum Technologies (XNDU 2.16%) fell 10% this week, according to data from S&P Global Market Intelligence. The quantum stock had recently boomed after its merger with a special purpose acquisition company (SPAC), but has since fallen back to earth, almost back to its merger price. An insider sale this week further exacerbated losses.
Here's why Xanadu Quantum sank, and whether now is a good time to buy this quantum stock.
NASDAQ: XNDU
Key Data Points
Insider selling, major fundraising
Xanadu Quantum went public via a SPAC merger in late March. With a low float and hype around the future of quantum computing, the stock went off like a rocket in the next month, rising to almost $40 from its $10 merger price in late April.
Since then, insiders have begun to sell their stakes, driving down the share price. Just this week, Millennium Management disclosed that the investment fund held a 5% stake on June 17th or earlier (according to the SEC filing), but had trimmed that stake to under 0.2% of the business by this week. At the same time, Xanadu Quantum has launched a $300 million at-the-market offering to sell additional shares and raise capital. With so much selling pressure, it is no wonder that Xanadu Quantum stock is sinking.
Image source: Getty Images.
Should you buy the dip?
Even after this dip, Xanadu Quantum stock trades at a market cap of $5 billion in Canadian dollars. Its business is not doing much today, generating just $2.8 million in revenue last quarter and posting huge losses.
This makes Xanadu Quantum more of a science project than a viable business, meaning investors should avoid buying today.
