6/14/24 - $ionq - quantum best in class but TIMING matters

Jun 13

6/13/24 :: VROCKSTAR :: IONQ

writing myself a quick note here today bc i'm looking at industry leaders off the beaten path of normie stonks (check out the IOT comments today).

when it comes to quantum we can probably all agree it's "coming". we can also probably agree "nobody cares". that's great in investing when you can anticipate the anticipation. but there's a wrinkle.

among the few listed quantum names (beyond the obvious mega techs that are also developing these machines in house e.g. GOOGL comes to mind), we have QBTS, RGTI, and ARQQ. pls feel free to comment if you know of others - i'd like to add them to my watchlist.

Most of this tech is vaporware (sorry), based on the hours i've spent reading/ listening to others/ mgmt. however, only one seems to ACTUALLY be growing (look at revenue growth of the above peers it's flat to 20%) and IONQ is 80-100%. it's hard for me to believe this isn't sales driven - all of it - because the investment today is AI-GPU-related.

how do i think about valuation?
- well i'm only considering the industry leader IONQ in a sector where timing is unclear and adoption could still be years away. they are the most likely to still be around
- stock has looked healthiest vs. peers (comparing a few ways) we can get into details if you care in comments
- revenue seems to actually be doubling. will it continue. i dunno. if we do assume 40 mm in IONQ revenue is even $50 mm this year (let's round up, why not), it's still trading at a valuation of 25-30x enterprise value. can i get an LOL.
- here's the point. it's a SPAC (just a bad factor). it's not generating cash (just a bad factor). it's not en vogue (negative). revenue growth is likely a lot of push, not pull (not ideal). a lot of R&D and cash burn eats balance sheet net cash away while we wait (dang).
- similar to my IONQ logic... i think the upside in a MT/LT time frame could be massive, but the ST looks awful in this environment from a valuation perspective. hard for me to believe an institution will literally ape on this anytime in '24 nevermind let's see '25.
- it's a 25 bps position for me - a place holder
- i'd probably look for a capital raise, a macro risk off event that tanks this thing to minimally sub $6 to start buying more.
- OBJECTIVELY - my opinion - it's worth $2-3 today. will we get there, idk. same thing as saying IOT is probably "worth" low 20s. will we get there (read that note) IDK.

But i see NO VALUE in getting too big too soon. if it runs we can sell upside calls for income. we didn't make a ton but whatever, making money is the goal, responsibly (for me).

stay solvent. stay patient. don't ape into this at $8 unless u r an industry native, know these stonks better than everyone, sniff out some sort of catalyst (in which case pls share lol).

V