IonQ (NYSE: IONQ) stock price has come under intense pressure in the past four months as investors continue worrying about its growth, competition, and its cash burn. After surging to $21.58 in September, it has entered a deep bear market, as it lost almost 50% of its value. This plunge has brought its total market cap to $2.3 billion.

IonQ is a technology company that aims to disrupt the computing industry. It aims to do that by creating and selling advanced quantum computers that are faster and more capable than the mainstream ones. 

Some analysts, including Michio Kaku, believe that quantum computing is the future because of its ability to handle vast amount of data and its future potential. For example, they note that these computers can supercharge the drug discovery process, bring in new materials and even supercharge quantitative trading.

IonQ is not the only company that is working on quantum computers. IBM, Universal Quantum, and even Google have been researching this industry for years. This competition issue is one reason why the IonQ stock price has retreated in the past few months.

IonQ has built several quantum computing systems, with its harmony one having 11 physical qubits and Forte Enterprise version having 35. In its most recent results, the company said that it was seeing more demand for these products.

In this regard, IonQ’s revenue rose by 122% to $6.1 million in this quarter. This triple-digit growth happened from a low base since it started shipping in late 2022. Its bookings increased to $26.3 million, higher than its guidance. Its goal was to get $100 million in bookings by the end of the year.

Like other companies in its stage, IonQ is still losing money and profitability is not in sight. Its net loss came in at $44.8 million in the third quarter, much higher than the $24 million it made in the same quarter in 2023.

There have also been concerns about its balance sheet, which I believe is sufficient. It ended last quarter with $485 million in cash and equivalents. It believes that these funds are sufficient to last until it turns cash flow positive. It also insisted that it intended to use its shelf offering for acquisitions in a bid to boost its offerings.

IONQ chart by TradingView

Therefore, in light of these, the question is whether IonQ is a good company to invest in. For one, it is a highly overvalued company with a market cap of over $2.3 billion. Most analysts believe that the company’s revenue and losses cannot justify this valuation. Its annual revenue is expected to come in at $21.70 million in 2023 and $38.90 million in 2024.

Still, it is hard to recommend buying IonQ stock because, in reality, the future of quantum computing is still uncertain. This is in line with what I wrote when I warned that it was a high-risk and high-reward investment. It is also about to form a death cross pattern, which happens when the 200-day and 50-day moving averages cross each other.

At the same time, shorting the company is also risky because the company has a high short interest of 25%. Recently, we have seen many highly-shorted companies like Rumble and DWAC surge in a short squeeze.

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