Why Dollar-Cost Averaging May Not Make Sense With IonQ Stock

Despite its relatively small size, IonQ (NYSE: IONQ) has built competitive advantages in the quantum computing space. Rather than focusing on an arms race to bring more quantum bits, or qubits, to market, it focuses on better qubits, meaning it could outperform competitors with fewer but better-connected atoms.

Unfortunately, that may not be enough to rescue the quantum computing stock, and here's why a dollar-cost averaging (DCA) approach is unlikely to help.

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Where IonQ stock stands

In many respects, IonQ stock is in a solid position. Aside from its technical breakthroughs, it holds nearly $2.4 billion in liquidity. In 2025, its negative free cash flow was about $300 million, meaning it could maintain its current pace for years without needing more cash from outside.

It will need that runway. IonQ's revenue just tripled to $130 million in 2025. Unfortunately, its $512 million loss for 2025 increased from $332 million last year.

Instead, the danger of DCA stems in part from how it raised that cash. At the end of 2024, liquidity was $340 million. However, since the beginning of 2024, the number of outstanding shares has risen by 65% to nearly 367 million.

During that time, the stock briefly rose from less than $19 per share to a peak of above $84 per share. This gave IonQ an opportunity to issue massive numbers of shares. Though that greatly improved its financial position, today's stock price of around $29 per share nearly wiped out its gains over the last year.

Moreover, its current valuation probably makes it too expensive to touch. Its price-to-sales (P/S) ratio is now 61, a level well beyond some of the fastest-growing stocks. Also, despite rapid revenue increases, the forward P/S ratio takes it down to 43 and 28 for the forward one-year P/S ratio. This means investors are probably going to be overpaying at today's prices now and in the foreseeable future.

Furthermore, IonQ's large-cap competitors are not ignoring quantum computing. Google parent Alphabet has made strides in error correction through its Willow chip. Also, supercomputing giant IBM offers what it calls "quantum centric" supercomputing architecture to integrate quantum into existing high-performance computing (HPC) systems.

Thus, much of its $2.3 billion in liquidity will have to go into research and development to stay competitive. That could challenge the company long term if its massive losses continue.

Avoid IonQ stock

Given the above conditions, investors should not buy IonQ stock even if they want to employ DCA.

Indeed, IonQ is on track to survive for years, and its competitive advantages could help it succeed long term.

Nonetheless, to get to such a point, it has to eventually turn profitable while fighting off competitive challenges from some of tech's top companies.

Additionally, at 61 times sales, it needs another speculative frenzy to rise from current levels, which is, at best, an uncertain prospect. Thus, until its valuation drops to levels comparable to that of other promising growth stocks, investors should not even consider a dollar-cost averaging strategy in this stock.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, International Business Machines, and IonQ. The Motley Fool has a disclosure policy.