Why IonQ Stock Is Plummeting Today

IonQ (NYSE: IONQ) stock is seeing a big pullback Tuesday. The quantum computing specialist's share price was down 10.1% as of 3:25 p.m. ET and had been off as much as 12.4% earlier in the day's trading.

IonQ's valuation is slipping today following news highlighting interest in a Chinese company in the quantum computing space. According to a report from Global Times, Origin Quantum Computing Technology's Wukong machine is generating lots of excitement -- and the interest highlights rising competition in the industry.

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IonQ stock slips as Chinese quantum tech takes the spotlight

Origin Quantum Computing Technology, a Chinese start-up, has reportedly created a prototype machine that features 72 working qubits. The company's Wukong machine has now been visited remotely by 20 million users around the world and been accessed by researchers from 139 countries. For comparison, the machine that IonQ is gearing up to launch this year is said to have 64 working qubits.

What comes next for IonQ?

Origin Quantum has seemingly developed a machine that will outperform IonQ's upcoming 2025 release on some key fronts. On the other hand, IonQ says that it's also gearing up to launch a quantum computer with 256 working qubits.

With today's pullback, IonQ is now valued at roughly $7.2 billion and is trading at approximately 87 times this year's expected sales. While the company could wind up delivering explosive returns for investors with very high levels of risk tolerance, shares also come with a high level of downside potential at current prices.

Competition is heating up in the quantum computing space, and IonQ could face rising pressures from rivals with greater capital and infrastructure resources. In addition to smaller U.S.-based specialists in the category, companies including Alphabet and IBM are also making plays in the space. As highlighted by today's news about Origin Quantum and its Wukong machine, Chinese companies are also pouring resources into developing the tech.

So while quantum computing has "next big thing" potential, investors should understand that there's no guarantee that IonQ will wind up being one of the big winners in the space.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and International Business Machines. The Motley Fool has a disclosure policy.