QUBT: The King of Baseless Speculation

Summary

• Strong Sell Rating: Quantum Computing Inc. (QUBT) is rated a 'Strong Sell' due to excessive valuation and poor financial performance.

• Speculative Bubble: QUBT’s $1.3 billion market cap is speculative, with minimal revenue and high costs. The company struggles to compete with larger, well-funded competitors.

• Lack of Product-Market Fit: The company's products and goals appear unfocused, making the investment case weak.

• Financial Weakness: Recent funding of $190 million has given it runway but raised expectations for rapid execution and revenue growth.

• Competitive Disadvantage: QUBT is significantly outmatched by industry giants like Google, IBM, and Microsoft in resources and talent acquisition.

• Incredible Shorts: IonQ (IONQ) and Rigetti Computing (RGTI) also pose shorting opportunities due to overvaluation.

Quantum Computing Inc. (QUBT) has been caught up in the recent rally of quantum computing stocks fueled by advancements from giants like IBM and Google. However, QUBT’s fundamentals are weak, and we recommend investors sell their shares. The company’s $1.3 billion market cap is largely speculative, with just $101,000 in quarterly revenue and high operating expenses, resulting in significant losses.

Despite raising $190 million in recent equity offerings, the company’s ability to execute remains questionable. QUBT’s approach to product development, including the Dirac-3 platform and a thin-film lithium niobate (TFLN) foundry, lacks clarity and focus. Revenue sources like a LiDAR project for Johns Hopkins University seem misaligned with the company’s stated goals, further complicating the investment case.

While the funding provides financial runway, it does not close the vast resource gap between QUBT and competitors like Microsoft, Google, and IBM, which collectively spend orders of magnitude more on R&D. Attracting top talent in this environment is a significant challenge for QUBT.

Valuation-wise, QUBT appears vastly overinflated. Its assets, including recent funding, are valued at approximately $185 million, leaving over $1 billion of speculative value. Even under the most optimistic assumptions, the stock has significant downside risk.

Although shorting QUBT may be too risky for some investors, we strongly advise selling existing shares. Similarly, IonQ (IONQ) and Rigetti Computing (RGTI) also appear overvalued and represent potential short opportunities.

TLDR: Quantum Computing Inc. (QUBT) is heavily overvalued with negligible revenue and disorganized goals, making it a risky investment. Despite recent funding, it’s unlikely to compete with industry giants. IonQ and Rigetti Computing are similarly overvalued and present strong short opportunities.