Despite Soaring Revenue, IonQ Shares Tumbled. Is This an Opportunity to Buy the Stock on the Dip?

After skyrocketing beginning last autumn, shares of quantum computing company IonQ (NYSE: IONQ) came back to earth this year. The stock is still up more than 120% over the past year as of this writing, but its shares are down about 40% in 2025.

The stock's drop was recently fueled by the company's fourth-quarter report on Feb. 26. Despite surging revenue, the company saw its stock dip on the news.

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Let's take a closer look at IonQ's most recent results and outlook to see if this is a good opportunity to buy the dip.

The industry

Before looking at IonQ's revenue, I'll explain what quantum computing is.

It's a nascent technology that uses the laws of quantum mechanics to solve problems much more quickly than traditional computers. Instead of using bits, which are confined to either being a 0 or 1, quantum computing uses quantum bits, or qubits, which can be in superposition. In simplistic terms, this means they can be in multiple states at the same time.

If you've ever watched the TV show The Big Bang Theory and heard them talk about Schrödinger's cat (where a cat left in a box is considered to possibly be both dead and alive until the box is opened), this is an illustration of the principal of superposition. Meanwhile, it is superposition that allows quantum algorithms to process information in a fraction of the time of modern-day computing.

Quantum computing stocks got a lift last fall after Alphabet announced a huge breakthrough with its quantum computing chip, Willow. One of the big obstacles for quantum computing has been that it is error-prone, and the more qubits it uses, the more error-prone it becomes. However, with Willow, Alphabet says it was able to decrease the number of errors as it scaled up qubits, achieving what in the industry is known as being "below threshold."

That said, while a big achievement, quantum computing currently has no practical uses, and many experts believe it's not expected to be commercially useful for at least a decade.

For its part, IonQ sells specialized quantum computing and networking hardware, while it has a number of "direct access" clients that receive concierge application development support. It also offers access to its quantum computing solutions through AWS's Amazon Braket, Microsoft's Azure Quantum, and Google's Cloud Marketplace.

Image source: Getty Images.

The numbers

Now, a look at the numbers. For Q4, the company saw its revenue nearly double to $11.7 million from $6.1 million a year ago. That was well ahead of the $7.1 million to $11.1 million in revenue it previously forecast.

It recorded $22.7 million in new bookings for the fourth quarter and $95.6 million for the year. Bookings can be an indication of future revenue growth.

It recently sold the first unit of its next-generation barium-based system, Tempo, which is slated for delivery later to Quantum Basel in Switzerland. It also plans to demonstrate its new AQ 64 system by year-end.

The company also won a number of nice deals recently. In September, it was awarded a $54.5 million contract with United States Air Force Research Lab (AFRL), while in January, it was awarded another $21.1 million contract with AFRL.

Nonetheless, the company continues to be unprofitable, recording a loss of $202 million in the quarter, or $0.93 a share, compared to a loss of $41.9 million, or $0.20 a share, a year ago.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), meanwhile, was a loss of $32.8 million, versus a loss of $20 million a year ago.

IonQ also continues to burn cash, with negative operating cash flow of $105.7 million for the year, and negative free cash flow of $127.6 million.

It ended the year with $363.8 million in cash and investments and no debt. It entered into an ATM program (at-the-market) where it can sell up to $500 million in new stock to raise cash.

Looking ahead, IonQ forecast 2025 revenue to range between $75 million and $95 million, with an adjusted EBITDA loss of $120 million. That would compare to revenue of $43.1 million and an adjusted EBITDA loss of $107.2 million in 2024.

It expects revenue to be between $7 million and $8 million in Q1 versus $7.6 million a year ago.

It recently closed the acquisition of Qubitekk, a quantum networking company, and announced it would acquire a controlling stake in ID Quantique to help its network offering.

The company also announced that Niccolo De Masi will take over as president and CEO, while former CEO Peter Chapman will become executive chairman.

Should investors buy the dip?

Given the early nature of quantum computing, IonQ is a very speculative stock. It trades at a forward price-to-sales multiple of about 65, based on analysts' 2025 estimates.

IONQ PS Ratio (Forward) data by YCharts

That's an extreme valuation for a hardware company with 57% gross margin last quarter that is unprofitable and burning through a ton of cash. The company likely won't be profitable this decade, and when quantum computing will become commercially viable is a big unknown. As such, I'd suggest staying on the sidelines.

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