Quantum Computing Inc.: Strong Sell Recommendation, Avoid Quantum Realm.

Quantum Computing Inc. (QUBT) operates in two major product categories: Quantum Machines and Foundry. They develop photonic hardware and software to accelerate telecom and datacom processes. The firm has operations in the US and has received significant funding. Despite this, the author advises a "Strong Sell" rating due to the firm's high valuation and lack of profitability.

Quantum Computing Inc. (QUBT) has been making waves in the quantum computing industry, particularly with its photonic hardware and software solutions. The company operates in two major product categories: Quantum Machines and Foundry, focusing on developing photonic hardware and software to accelerate telecom and datacom processes. Despite significant funding and promising advancements, QUBT faces substantial challenges that have led to a "Strong Sell" rating by some analysts.

On July 21, QUBT's shares fell by 5.72% in mid-day trading, reaching an intraday low of $18.15 before recovering slightly to $18.39. This places the stock 32.25% below its 52-week high of $27.15 and 3,370.70% above its 52-week low of $0.53 [1]. The average target price for QUBT, based on analyst forecasts, is $18.50, suggesting an upside of 0.57% from the current price [1].

The company's revenue has been minimal, with around $39,000 in Q1 2025, but management expects a pick-up in revenue starting in 2025. The biggest boosts could come from photonic chips gaining popularity in telecom and datacom, and from landing sizable software licenses for its Qatalyst platform. However, QUBT's high valuation and lack of profitability have raised concerns among investors. The company's price-to-sales ratio is a stratospheric ~6,900x, significantly higher than the sector average of 4.35x [2].

QUBT's operations are primarily based in the US, and it has secured funding through equity sales and R&D partnerships. However, the company's cash flow has been deep in the red, with operating cash flow being negative $16 million in Q1 2025. This high cash burn and ongoing R&D spending could lead to further equity raises, risking shareholder dilution [2].

The company's competitors include D-Wave, IonQ, Rigetti, IBM, and Google, all of which have substantial resources and are heavily investing in the quantum computing field. QUBT's edge lies in its specialty photonic foundry, but it must secure recurring contracts and make it hard for competitors to break into thin-film lithium niobate manufacturing to establish a defensible niche [2].

In conclusion, while Quantum Computing Inc. (QUBT) shows promising potential in the quantum computing industry, its high valuation and lack of profitability pose significant challenges. Investors should carefully consider these factors before making investment decisions.

References:
[1] https://www.gurufocus.com/news/2991236/quantum-computing-inc-qubt-shares-gap-down-to-183947-on-jul-21
[2] https://finimize.com/content/qubt-asset-snapshot