IonQ stock price has gone parabolic and is on track to have its best weekly performance on record after publishing strong results and inking a deal with ANSYS. The shares surged to $22.3 on Thursday, its highest level since November 2021. It has soared by over 245% from its lowest level this year, giving it a market cap of over $3.2 billion.
Quantum computing growth
IonQ is a top company in the quantum computing industry, where it manufactures computers that are available on Amazon Web Services (AWS), Microsoft Azure Quantum, and Google Cloud Marketplace.
The management believes that the quantum computing industry is the future of computing as the technology industry grows. It believes that the industry’s total addressable market will grow to $65 billion by 2030. Some of the top industries that will benefit are manufacturing, chemical modeling, and artificial intelligence.
More data shows that quantum computing will create an economic value of $850 billion by 2040, including $170 billion for hardware and software providers.
The company believes that its trapped ion architecture will be the best approach to build quantum computers.
Read more: IonQ stock price: Upside if Michio Kaku’s forecast is correct
In a statement this week, the company said that it entered into a partnership with Ansys, a leading player in the computer-aided engineering market. Just earlier this year, Ansys was acquired by Synopsys to create a multi-billion dollar juggernaut.
According to the statement, the partnership will make simulation accessible to quantum experts and non-experts. At the same time, IonQ will use Ansys’ multiphysics technology to design solutions for scalable quantum computers.
The other top companies using IonQ’s technology are Airbus, Oak Ridge, Hyundai, and Thompson Machinery.
The most recent results released this week showed that IonQ’s revenue rose to $12.4 million, a 102% increase from the same period last year. Its bookings grew to $63.5 billion, while its net loss moved to $52.5 billion.
A key highlight in the quarter was that it entered into a $54.5 million contract with the US Airforce Research Lab to develop and deploy quantum systems. It also reached a $9 million deal with Maryland University to provide quantum computing solutions.
Most importantly, IonQ boosted its full-year revenue guidance to between $38.5 million and $42.5 million. The bookings range for the year will be between $75 million and $95 million.
Valuation concerns remain
A key concern for IonQ is that its valuation has become highly stretched. Besides, this is a loss-making company with an estimated annual revenue of $42.5 million that is being valued at over $3.5 billion. That valuation means that the company has a forward price-to-sales ratio of 82.35.
To some extent, this valuation is almost understandable because the company started shipping its products in 2022.
Its estimated revenue of $41.38 million is an 87% increase from what it made last year. Also, the company is expected to make $82.9 million in 2025, a 100% increase from what it will make this year.
Its high valuation will be justified if it continues showing strong growth in the coming years. As we have seen with NVIDIA, a company can remain overvalued for a long time if it continues delivering strong results.
A key challenge is that its losses will continue growing. Its loss per share this year will be 81 cents followed by 80 cents next year.
IonQ ended the last quarter with $382 million in cash and equivalents. Therefore, because of its loss-making trend, there is a likelihood that it will need to raise more cash either this year or in 2025.
Read more: IonQ stock price analysis: high-risk, high-reward investment
IonQ stock price analysis
IONQ chart by TradingView
The weekly chart shows that the IONQ share price has been in a strong bull run in the past few weeks. This rally accelerated after it published strong financial results this week.
The stock has flipped the important resistance level at $21.6, its highest swing on September 11. This was a notable level since it was also the upper side of the cup and handle pattern, a popular bullish sign in the market.
The 50-week and 25-week moving averages have formed a bullish crossover pattern. Also, oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. It is also approaching the 61.8% Fibonacci Retracement level.
Therefore, the stock will likely continue rising now that it has moved above the cup section. However, in the near term, it could consolidate or pull back as it forms the handle section.
In the long term, there are odds that the stock will surge and retest the all-time high of $36, which is about 62% higher than the current level. This view will become invalid if the stock drops below the key support level at $15.
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