IonQ – A Publicly Traded Quantum Computing Stock
Quantum computing technology is like CBD. We’re told it’s this great wonderful thing that will solve all these problems, but nobody can actually tell if it’s working. That’s why we traveled to Vancouver, Canada to learn How Quantum Computing Software Gets Built by speaking with Landon Downs, Co-founder and President of one of the world’s leading quantum computing software companies – 1QBit. We learned that whoever gets the “quantum advantage” doesn’t necessarily want everyone else to know about it. In other words, measuring progress in the quantum computing industry is difficult.
The quantum computing space always seems to show equal measure of successes and failures. Microsoft recently retracted a key quantum computing paper, while Google claimed to have reached quantum supremacy. Investors continue to pour money into startups, something we looked at in a piece last year titled, Is Quantum Computing Real or Just Vaporware? Now, a company called IonQ is merging with a SPAC called dMY Technology Group, Inc. III (DMYI) to offer investors what’s being touted as the first publicly traded quantum computing stock.
IonQ – A Quantum Computing Stock
Founded in 2015, Maryland startup IonQ has taken in $82 million in funding from an impressive roster of investors including names like GV (Google Ventures), Amazon, Samsung, Airbus, Lockheed Martin, and Bosch. All that money is being used to develop trapped ion quantum computing technology – hardware and software. We’re MBAs, not physicists, so we would never be able to properly articulate this technology other than to say it operates at room temperature and provides the longest qubit lifetime. IonQ’s qubits are ionized ytterbium atoms, a silvery rare-earth metal. Each ytterbium atom is perfectly identical to every other ytterbium atom in the universe. Says the company:
Individual atomic ion qubits in an ion trap are superior to competing qubit platforms, creating the ability for IonQ to move farther, faster than the competition.IonQ
Notable events for IonQ can be seen in the below timeline and include building the world’s most powerful quantum computer and hardware partnerships with Microsoft and Amazon.
The company is expecting $5 million in revenues for 2021. It’s uncertain whether that coincides with their first installation of a quantum computer – a “system online” – in 2021. We’re unsure if that’s the same one they’re referring to when they say, ” IonQ expects to deliver its first edge-deployed quantum computer within the next 18 months.”
Like most SPACs, IonQ’s glossy investor deck raises more questions than it answers. In a blog post last October, the company said, “our new 32 qubit system will be first available to our direct partners across energy, pharmaceutical, and manufacturing via private beta, and then commercially available on AWS Braket and the Microsoft Azure Quantum in early 2021.” The same press release mentions other names in quantum computing IonQ has been working with – 1QBit, QC Ware, Cambridge Quantum Computing, and Zapata Computing.
One notable claim IonQ makes is that their quantum computer is exponentially more powerful than other competing quantum computing vendors.
It’s interesting to see who they decided to include in “the pack.” Suspiciously absent are IBM and Intel, two companies we thought were leading in their research efforts, at least back in April 2017 when we wrote about Artificial Intelligence (AI) and Quantum Computing.
When companies make bold claims like this, it’s important to know who is actually behind them.
The IonQ Management Team
Venture capitalists don’t just throw money at great ideas, they look at who is running with them. For IonQ, its two founders bring formidable technical credentials to the table, having captured over $160 million in
free money grants over the years along with numerous patents to help protect their technology.
Co-founder Christopher Monroe has been working on quantum computing for 25 years having demonstrated the first-ever quantum logic gate with Nobel laureate David Wineland at NIST in 1995. His list of academic accomplishments makes you wonder why you’ve squandered your life so far, and he’s responsible for developing many of the fundamental techniques for trapped ion quantum computing.
The other co-founder, Jungsang Kim, leads the Multifunctional Integrated Systems Technology group at Duke University where his lab leads the world in miniaturization of quantum systems. In 2001, he led a Bell Labs team to break the world record for what is still the world’s largest optical switch.
Other management appointments demonstrate an impressive track record of success. IonQ’s VP of Software, David Bacon, has over 20 years’ experience in quantum computing including having led the quantum software team at Google that claimed to demonstrate quantum supremacy. (Whoever wrote the press release announcing his hire last October has a great sense of humor.) The company’s President and CEO, Peter Chapman, began his career at the age of 16, working for Marvin Minsky, and recently led Amazon Prime’s technology division. He has a track record of successful exits, and now he can chock up one more as IonQ decides to go public via SPAC, much to the chagrin of people like us who believe that SPACs do a disservice to retail investors. In an interview with ZDNet, Mr. Chapman said he joined IonQ “because he is betting that quantum computing can achieve artificial general intelligence.”
The founders of IonQ are accomplished pioneers in the field of quantum computing who will attract the sort of talent the company needs to succeed – and they’re hiring for loads of roles right now. They’ll need to if they expect to deliver a rack-mounted quantum computer for data centers by 2023.
To Buy or Not to Buy
We’re left with what seems to be a very promising quantum computing company with the world’s most powerful quantum computer that they hope to begin deploying this year. Other than that, we’re provided with very little information that helps us make an investment decision. Shares are currently trading at an +11.4% premium relative to what institutional investors were willing to pay, something we’re not keen on.
As investors, we don’t care if you’re using classical computing, cloud computing, or quantum computing. We just want to see progress made in the form of revenue growth (preferably with a SaaS business model) which shows that you’ve built hardware or software applications that other companies are willing to pay for – qubits or not. We don’t invest in pre-revenue companies, and the same holds true for the quantum computing space, no matter how exciting of a future we’re promised. We’ll be waiting until after IonQ completes their SPAC and some proper regulatory filings are made, then we’ll take another look at the company.
There aren’t many alternatives for pure-play quantum computing stocks, certainly none with the credentials that IonQ brings to the table. Sure, there are tech giants dabbling in quantum computing – Google, Microsoft, Amazon – but they’d hardly be considered quantum computing stocks. IonQ may be the only quantum computing stock there is right now, but that doesn’t mean you should rush to invest in it.
Should the transaction take place as planned, IonQ will trade under the ticker IONQ.
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