Will IonQ's Big Move for Quantum Computing Open Door to All-Time High?
Aiming for breakthroughs, a new, bullish pattern has emerged for the volatile shares..
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Quantum computing company IonQ IONQ made some news early on Monday morning. The College Park, Maryland-based firm announced a definitive agreement to acquire Oxford Ionics (of Oxford, England) for 1.065 billion in common IonQ shares and roughly $10 million in cash.
Most readers are likely at least somewhat familiar with IonQ as a leader in quantum computing and the development of high-performance systems based on trapped ion technology. Key competitors include Quantum Computing Inc QUBT, D-Wave Quantum QBTS and Rigetti Computing RGTI as well as some of the more well-known large tech names.
Probably not so many readers are familiar with Oxford Ionics, which happens to be the current world record holder for fidelity. Fidelity is a measure for accuracy in quantum computing operations.
The idea, for IonQ, is to bring together the firm's quantum computing capabilities and networking stack with Oxford's ion-trap technology on standard semiconductor chips. The end goal is to deliver innovative, reliable quantum computers that reflect increased power, scale and capability.
Combined, the firms, as one, expect to build systems with 256 physical qubits at accuracies of 99.99% by the year 2026, and by 2027 reach 10 thousand physical qubits with logical accuracies of 99.99999%. By the year 2030, the goal is to reach 2 million physical qubits in its quantum computers, enabling logical accuracies exceeding 99.9999999999%.
Not Done There...
IonQ released even more news later, but still rather early on Monday morning. It announced the results of a collaborative research program with AstraZeneca AZN, Amazon AMZN Web Services and Nvidia NVDA to develop and show a quantum-accelerated computational chemistry workflow.
The workflow provided an example of a hybrid quantum-classical solution that works through complex pharmaceutical challenges to development. The demonstration is meant to display the potential to improve both the speed and efficiency of the drug development process.
My Thoughts
There's no real revenue in this business just yet. All of the quantum computing stocks are trading higher on these news stories Monday morning, though. While IonQ has burned about $135.4 million in operating cash flow and capital expenditures over the trailing 12 months, the balance sheet remained strong.
As of the end of the March quarter, IonQ had a cash position of $588.3 million and current assets of $637 million. The firm had no debt on the books whatsoever. At that pace, even without revenue, which hopefully is not likely, this balance sheet is in a good place.
On top of that, all of the quantum computing stocks have elevated short positions. Of IonQ's total float, 16.3% is currently held in short positions. That's not a bad place to be for a burgeoning operation.
Readers likely know that I am long QUBT and have been looking for a way to get back into D-Wave effectively after having taken my profits in that one prematurely. That said, IonQ, even with a little dilution, perhaps offset somewhat by the short interest, could be a good way to diversify one's holdings in the quantum computing space.
Check this out:
Some with good memories may remember when I showed you this double-bottom bullish reversal that followed that double-top bearish reversal. Purely technical traders did very well with those setups.
Well, now that the run-up from that double bottom would appear to have run out of gas, a new, bullish pattern emerges:
Now we have a nearly perfectly developed cup-with-handle pattern with a $49 pivot, which has supplanted our double bottom. No promises, as this is a wildly volatile group of stocks, but if IONQ can take and hold that pivot, the door, in my opinion, opens to prices possibly as high as $59. The stock's all-time high, set back in January, is $54.74.
At the time of publication, Guilfoyle was long QUBT and NVDA equity.
