IonQ (NYSE:IONQ) shares tumbled 20% last week as broader tech sentiment turned cautious and some investors locked in gains after the stock’s recent run-up. The pullback came despite the company posting one of its strongest quarterly reports to date earlier this month.
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Specifically, IonQ generated Q3 revenue of $39.9 million, amounting to a 221.5% year-over-year increase, surpassing the Street’s estimate of $27.9 million and exceeding the top end of its guidance by 37%. Management attributed the strong performance to rising demand across quantum computing, sensing, networking, and cybersecurity applications. At the other end of the spectrum, adj. EPS came in at -$0.17, beating expectations by $0.03.
For the full year, the company now anticipates revenue between $106 million and $110 million, well above the $91.33 million consensus estimate and its prior guide of $82 million to $100 million. IonQ also reaffirmed its adj. EBITDA loss midpoint guidance, with an expected range of a $206 million to $216 million loss.
In addition, IonQ highlighted several technical milestones in both qubit count and gate fidelity. The company reached #AQ64 (Algorithmic Qubits 64, reflecting effective computational capacity based on qubit count and fidelity) on its 100-qubit Tempo system, achieving this three months ahead of schedule. #AQ64 represents a computational space more than 260 million times larger than the prior #AQ36 Forte system. On the fidelity front, IonQ achieved a two-qubit gate fidelity above 99.99%, marking the highest level reported in the industry so far. This milestone was demonstrated on a prototype system using an Electronic Qubit Control (EQC) architecture.
At the same time, the company seemed confident regarding its performance in Stage A of DARPA’s QBI program. Management noted that both IonQ and Oxford Ionics (which IonQ acquired in September) have received positive technical feedback from DARPA.
Scanning the print, Rosenblatt analyst John McPeake hails a “pivotal quarter,” pointing out that the consensus outlook now looks seriously at odds with the company’s own.
“Street estimates for revenue growth over the period from 2025 to 2030 show almost 8,000bp of deceleration–the Q&A on the call suggested the reverse,” McPeake explained.
The analyst highlights the $2 billion equity raise in October, which increased IonQ’s cash position to more than $3 billion. With an estimated total cash burn of $0.9 billion through 2030 (when it should break even), McPeake believes the company will have sufficient liquidity to support its growth objectives.
“We think investors should own IONQ during this period of acceleration,” McPeake summed up, assigning the stock a Buy rating, while raising the price target from $70 to a joint Street-high of $100. Should the figure be met, investors will be pocketing returns of ~112% a year from now.
Most analysts agree with the Rosenblatt stance; based on a mix of 7 Buys and 2 Holds, the stock claims a Strong Buy consensus rating. Going by the $76.86 average price target, shares will appreciate by ~63% over the 12-month timeframe. (See IONQ stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.