Why D-Wave Quantum Stock Crashed Today
Key Points
D-Wave missed earnings this morning, losing $0.13 per share.
Management pooh-poohed the fact that bookings growth also slowed to less than sales growth.
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Quantum computing stock D-Wave Quantum (NASDAQ:QBTS) tumbled 8.8% through 11 a.m. ET Tuesday after reporting mixed earnings this morning.
Analysts didn't expect D-Wave to turn profitable in Q3, forecasting a $0.10 per share loss instead. In fact, D-Wave lost $0.13. On the bright side, its reported revenue of $4.5 million slightly surpassed forecasts of $4.4 million.
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D-Wave Quantum Q3 "earnings"
Sales rose a modest 21% year over year at D-Wave. "Remaining performance obligations" -- basically backlog -- grew more than 1200% to $38.3 million. At its current pace, that's enough work to keep D-Wave busy for the next two-plus years.
Or less. D-Wave noted that its bookings for future work are growing much faster than sales -- up 611% year to date -- implying that revenues may grow even faster in future quarters.
What's next for D-Wave stock?
Or more. In Q3, D-Wave did experience a slowdown in new bookings, which actually grew only 19% in this particular quarter -- slower than revenue grew. D-Wave is quick to point out that "bookings in any single quarter can vary significantly based on the timing of larger transactions," and so the Q3 slowdown could be only a blip.
I actually buy that argument. We're still talking very small numbers here, with quarterly sales in the single-digit millions. But if the blip turns into a trend, it may not matter much to investors that D-Wave "grew bookings 611%" in the first three quarters of the year -- not if future quarters show bookings slowing down a lot.
Ultimately, we're still very early in the quantum game, and it's too early to have much confidence in picking winners and losers. D-Wave remains a very speculative, unprofitable stock. Gauge your risk tolerance accordingly.
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Rich Smith 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.
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