Stocks Taking a Quantum Leap: Beaten Down Quantum Sector Appears to be Strengthening

Insider Brief

• Quantum startups that are trading publicly seem to be recovering from severe lows of 2022 and early 2023.
• IonQ and D-Wave both witnessed a dramatic surge in their prices recently.
• Better overall market conditions and strong earnings may explain some of the recovery.

PRESS RELEASE — Pure-play quantum computing stocks seem to have shaken off waves of bad news and now are trading at, in some cases, double their price just a few months ago. What’s more shocking about the turnaround is that these same stocks looked perilously weak just last year.

• IonQ, subject to a withering short-selling report in 2022, is now up more than 400%, climbing from approximately $3 to nearly $19, at this writing. It’s up 70% from its initial price of around $11 in fall of 2021.
• D-Wave, which was under scrutiny from NASDAQ for its low stock price, is up 46% and is now trading in the $2 range, although it’s still down around 80% from its initial price.
• Rigetti is up more than 200% from the beginning of the year. Rigetti was subject to a massive management change and it’s stock was severely battered in the process.

Reasons?

A few factors are probably influencing this rebound in quantum stocks.

First, the overall stock market has recovered from a severe correction following the economic turmoil in wake of the pandemic. Supply chain woes, inflation and the rate hikes to stem those price hikes caused most of the market to suffer, with technology stocks taking the brunt of the economic backlash.

Cool, new technology, especially ones as mysteriously cool as quantum, tend to jump into the public trading sphere backed by great euphoria. That unsustainable euphoria can quickly shift to despair, sending the stock on a rollercoaster ride, not unlike the extreme leaps and dips witnessed by these quantum startups. It could be that investors have settled into a reasonable outlook on quantum technology — there’s a huge upside, but that won’t be achieved overnight.

Another factor could be that quantum use cases are appearing with regularity into the mainstream media. This may help educate savvy investors into what lies ahead for quantum tech. IBM and Quantinuum, in particular, have released research showing the potential advantage and utility of quantum computing, for example. Quantum sensing is another technology that has entered the national conversation. In line with that, governments are recognizing the importance of quantum technology for national security and national defense. These policymakers are also showing a willingness to invest in the technology, which may boost investment sentiment in quantum

Finally, we’re seeing quantum science turn into quantum business. These public quantum companies have demonstrated in their last few quarterly reports that they’re capable of earning revenue and managing their money, even in this nascent, emergent quantum era.

It’s worth considering that this surge could be a temporary phenomena based on psychological factors.

For example: there’s the small numbers effect: it’s easy to notch a 50 percent return from $2 to $3, but going from, let’s say, $12 to $18 is much more difficult.

And, while classic-era stock traders often refer to a dead cat bounce, quantum era traders may be witnessing a Schrödinger’s cat bounce, to coin a phrase.

This is not meant to be investment advice. You should do your own research to recognize the potential, as well as the risk, of investing in the quantum technology industry.

For more market insights, check out our latest quantum computing news here.