Why did QBTS's stock price drop?

**Bottom line: QBTS has been sliding because last week’s earnings under-delivered on profit, a major director dumped shares, and investors are growing uneasy about the company’s heavy cash burn despite huge cash on hand.** 📉 ### What happened? | Date | Catalyst | Market reaction | Why it mattered | |------|-----------|-----------------|-----------------| | 13 Aug 2025 | Director Steven M. West sold 144 k shares (~$2.6 M) | Stock fell ≈ 6 % the next trading session | Insider selling right after earnings amplified fears the stock was over-valued and signaled limited near-term upside | | 12 Aug 2025 (Q2 release) | Revenue beat ($3.1 M vs $2.59 M est.) but EPS missed (-$0.08 vs -$0.05 est.) | Knee-jerk drop as traders focused on widening loss | Margin still deeply negative (EBIT ≈ -1 255 %); loss overshadowed the sales beat | | 7 Aug 2025 | Pre-earnings commentary flagged rising opex and -$4.64 M EBITDA | Shares down ≈ 3 % intraday | Highlighted the imbalance between revenue growth and expense growth | | July–Aug 2025 | Dilutive capital raises + ATM program lifted cash to $819 M | Valuation reset vs. peers; stock lagged IONQ & RGTI | Fresh equity issues cushion R&D spend but dilute future EPS and signal a long road to profitability | ### The core pressures 1. **Profitability gap:** Gross margin is strong (≈ 82 %), but operating losses remain huge, reminding the market that commercialization is still nascent. 2. **Insider optics:** A sizable insider sale right after an EPS miss fed a “sell first, ask later” narrative. 3. **Dilution anxiety:** The giant cash war-chest came from equity sales; bulls see runway, bears see dilution. 4. **Competition heat-up:** Peers (IONQ, RGTI) announced technological milestones, making D-Wave’s roadmap look less exclusive. 5. **Post-parabolic fatigue:** After a 1 800 % run-up in the prior 12 months, many funds were eager to lock in gains. ### Is the drop overdone? • Liquidity is **not** the issue (current ratio ≈ 43; $800 M+ cash). • But the path to positive EPS is still murky; the insider sale makes management’s conviction look softer. • Expect continued volatility until either (a) the next roadmap milestone shows tangible revenue leverage or (b) OPEX growth moderates. --- ⚠️ **Take-away for long-term investors:** Quantum computing is a marathon, and D-Wave remains a speculative bet on technology leadership. If you believe its annealing approach wins niche markets, the pullback may be an entry point. Otherwise, waiting for clearer progress on profitability (or at least slowing dilution) could be the safer route. *Hope this clarifies the recent swoon—let me know if you’d like a deeper dive into valuation or peer comparisons!* 🚀