All eyes are on IonQ Inc (NYSE: IONQ) this morning as the quantum technology company soared nearly 45% to flirt with its all-time high of about $51.
Interestingly, there hasn’t been any news, a press release, analyst call, or any other development that could have catalysed such a massive move in IONQ shares today.
The most recent announcement was about the company’s team up with Einride aimed at improving freight logistics, and let’s face it: it was nowhere near significant enough to trigger a 45% surge in IonQ stock.
Therefore, investors are recommended to take profit and run before IONQ shares come crashing to the ground again.
IonQ stock valuation is a massive red flag
Valuation was a major overhang tied to IonQ shares even before their meteoric surge on Thursday, and now that it sits just below $50, it may only be fair to treat it as a ticking time bomb.
At current levels, the quantum stock is going for more than 140 times its estimated sales for 2025.
That’s alarmingly above even the best-of-breed AI stocks like Nvidia at writing.
Granted, quantum technology has all the ingredients of someday revolutionizing our lives for the better.
But experts are united in the view that its commercial applications may still be years away.
Still, IONQ stock is now up more than 150% versus its year-to-date low in early March.
IonQ share price surge resembles meme stock rallies
Serious investors should note that in the absence of a proper catalyst, the IonQ stock price rally this morning resembles more the meme stock rallies we have seen in the likes of GME and AMC.
Much of today’s bull run is driven by retail investors, and if memory serves me well, what comes next after such rallies is often painful for those who stick to them for a bit too long.
A smart move would, therefore, be to cut your exposure to IonQ shares as their current valuation will likely prove unsustainable over the next few days.
IonQ financials are in shambles
IonQ Inc can be likened to a ticking time bomb because it has hardly accomplished enough to command such a lofty multiple.
The NYSE-listed firm has not even achieved quantum supremacy so far, and its revenue came in at $7.6 million for the first quarter last week, which translates to “no growth” on a year-over-year basis.
Meanwhile, the company’s operating costs went up another 38% in Q1, and while its management resorted to an at-the-market (ATM) offering to improve the company’s cash position this year, the dilution still ended up hurting the existing shareholders.
In fact, IonQ’s insiders themselves have been unloading the AI stock in recent months.
So, it’s challenging to think of any good reason to own IonQ stock at current levels, unless you’re in it for a gamble.
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