Why Quantum Computing Stock Xanadu Quantum Technologies Plummeted 56.2% in September

After announcing auspicious developments last month, Xanadu Quantum Technologies gave bulls plenty of reason to suggest it was a good time to click the buy button on the quantum computing stock. That was hardly the case, though. One specific -- and, frankly, unsurprising -- catalyst contributed to the decline in shares last month.

According to data provided by S&P Global Market Intelligence, Xanadu shares plunged 56.2% in September.

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Anticipation and arrival of the lockup period ending were in full bloom

On Sept. 22, the post-merger lockup period following Xanadu's March 2026 business combination with Crane Harbor Acquisition Corp. ended, unlocking shares for early investors and insiders to sell.

Apprehensive of the lockup period's expiration, investors suspected that shares of the quantum computing specialist would drop sharply on Sept. 22, as evidenced by Xanadu's stock sinking 32% from the end of trading in August through the close of trading on Sept. 21 -- a period during which there was no negative news that had surfaced about the company.

Their concerns were validated. On Sept. 22, shares plunged 27.5% from the previous day's close. And they continued to log lower closes on each subsequent day of the month (except on Sept. 28 and Sept. 29, when they closed at $4.77).

Contrary to the stock's consistent decline throughout the month, the company reported several encouraging developments. On Sept. 9, for example, Xanadu announced a collaboration with ASML to develop advanced lithography processes for its photonic quantum hardware -- a collaboration that Xanadu posits will "enable both companies to gain deeper insight into how advanced lithography innovations can help reduce optical losses in quantum computing chips, accelerating the industry's path toward utility-scale quantum computing."

On Sept. 10, Xanadu announced the release of an open-platform solution, dubbed Backline, that it designed with AMD to enable communication between quantum and classical computing hardware.

And it wasn't only the company's announcements of partnerships with leading tech companies that belied the stock's drop. On Sept. 26, Paul Treiber, an RBC Capital analyst, initiated coverage of Xanadu with an outperform rating and a $16 price target.

Is now a good time to buy Xanadu stock following the recent pullback?

While Xanadu may not have the same name recognition as some other leading quantum computing stocks, it still warrants serious consideration from investors interested in this burgeoning niche of the tech sector -- especially in light of the company's recent collaborations with ASML and AMD. It's important to remember, though, that the quantum computing industry is still in its infancy, and many quantum computing stocks will likely continue to exhibit significant volatility. Consequently, those seeking industry exposure while mitigating risk may prefer to invest in a quantum computing exchange-traded fund (ETF) at this point.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Advanced Micro Devices. The Motley Fool has a disclosure policy.