Shares of D-Wave Quantum (NASDAQ:QBTS) have tumbled 60% from its 52-week high. As a bargain-hunting investor, I'm piqued by that. However, after further inspection, I think the quantum computing stock is more of a value trap than a bargain.
It trades at a sky-high valuation even though it's burning through cash. Here's why more value-conscious investors will want to avoid this quantum computing stock. Act 2 Could Be 15x Bigger.
Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout.
Continue » Before I get into my bear case, I wanted to start by giving D-Wave bulls their due. The only dual-platform quantum computing company is about to hit an inflection point. Its first half bookings were up a staggering 1,120% year-over-year to $35.5 million.
That suggests its revenue, which was flat at $3.1 million in the second quarter, should surge. D-Wave also recently received backing from the U.S. Government, as the Department of Commerce finalized a definitive agreement for up to $100 million in funding.
This financing will help accelerate R&D, including the development of its next-gen quantum computers. The company's growth potential has Wall Street unabashedly bullish. Of the 17 analysts with ratings on the company, 15 rate it a "buy," one a "strong buy," and the remaining analyst a "hold." Their average 12-month price target is over $35 per share, more than double the current price.
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