Why Quantum Computing Inc. Stock Fell 30% in November

Quantum Computing Inc. (NASDAQ: QUBT) stock was among the losers as the development-stage company fell alongside a broader retreat in tech stocks.

Given that the company isn't yet generating material revenue, it shouldn't be surprising that QCi, as the company is also known, is sensitive to concerns about a bubble in AI stocks.

Nonetheless, Quantum Computing Inc. delivered better-than-expected results in its third-quarter earnings report, which came out in the middle of the month, and it announced a collaboration with POET Technologies.

According to data from S&P Global Market Intelligence, the stock finished November down 30%. As you can see from the chart below, the stock fell sharply in the first half of the month before stabilizing in the second half.

QUBT data by YCharts

What's happening with Quantum Computing Inc.?

With less than $1 million in quarterly revenue, QCi isn't big enough for investors to judge it on results, and the stock therefore tends to move in response to broader investor sentiment, especially around high-risk emerging technologies like quantum computing.

However, the company did have some news to share.

On Nov. 11, it announced a strategic collaboration with POET Technologies to develop thin-film lithium niobate engines to power data transfers for AI systems and hyperscalers.

Still, like most announcements out of the quantum computing sector, this is a promise of future activity, rather than current achievement.

On Nov. 14, QCi reported third-quarter results with revenue of $384,000, up from $101,000 in the quarter a year ago, which also beat the consensus at $116,670. Management noted a recent sale to a top 5 U.S. bank in the quarter. The company also raised $750 million after the quarter closed to bring its liquidity to more than $1.5 billion, which should give it a long runway to invest as it reported a modest generally accepted accounting principles (GAAP) operating loss of $10.4 million in the quarter.

Image source: Getty Images.

What's next for QCi

QCi's balance sheet should give investors some confidence going forward, but it's still likely to be years before the company is generating material revenue. Management did not offer guidance in the earnings release, a sign that financial results still aren't where the company wants investors to focus.

Given that, the stock is likely to continue to trade according to sentiment, which could be a problem if bubble talk springs up again, as QCi is still trading at a market cap of $2.5 billion with little in the way of real results.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.