New Quantum Computing Price Target After $200 Million News

Cheap. Or is it? 

Quantum Computing QUBT is trading more than 16% lower ahead of the opening bell as the firm had entered into securities purchase agreements with institutional investors to sell 14.035 million shares of common stock at $41.25 per share. The shares went out on Friday evening at $18.88. With a closing date of Tuesday June 24, which is tomorrow, this offering will result in gross proceeds of about $200 million for the firm.

The firm has stated that it intends to use the net proceeds from the sale to accelerate commercialization efforts, to engage in strategic acquisitions, for working capital and for general corporate purposes. In response to the sale and the diluted share price, on Monday morning ahead of the opening bell, I had added small to my existing long position and had also re-initiated a long position in key competitor D-Wave Quantum QBTS. Neither firm will report for almost two months.

Considerations

Over the past 12 months, Quantum Computing, which I think had the better balance sheet ahead of this dilution, burned through about $23 million in cash. Over the past three years, the firm has burned through roughly $65.6 million. That makes this infusion of cash from investors at a price that's well above our net basis (now $12.26) and up an incredible 226% from where the shares bottomed in March, quite interesting. Apparently, despite the cash burn, and despite the fact that the shares traded $4.37 this year, some institutional investors are willing to pay $41.25 for the shares.

Charts​

The market will have to digest this news, and investors will have to digest the extra shares. That said, quantum computing stocks are momentum driven and do not trade on fundamentals. At least not in 2025. ​Quantum Computing or QBTS has now completed a large pattern and added a handle creating a $21.80 pivot.

Relative strength remains healthy, while the daily MACD flirts with a bearish cross-under of the 26-day EMA by the 12-day EMA. Still, all three components of that indicator are still flashing bullish sans that cross-under. The new and now elevated pivot takes my target price all the way up to $27.

D-Wave Quantum or QBTS actually has a better-looking chart. Readers will see that QBTS built a smaller cup-with-handle pattern that lasted into May. Then, that pattern generated a breakout that ultimately produced a bull flag pattern. Bull and bear flag patterns are patterns of continuance that run counter to trend.

In this case, the implication is that while the shares have sagged as this flag was built, and as both relative strength and the daily MACD have struggled (largely because, in my opinion, swing traders are playing around with the 21-day EMA), that the stock will find its footing around here and resume its northerly march.

The pivot would be the upper trendline of the flag, which in this case is $18.30. That would place, if I am correct, my target price at $23.

At the time of publication, Guilfoyle was long QUBT and QBTS equity.