Why IonQ Stock Soared 47% in May

Shares of IonQ (NYSE: IONQ), a developer of quantum computers and related platforms, were soaring last month, primarily in response to favorable coverage in Barron's, and an article that said it was aiming to be "the Nvidia of quantum computing."

Additionally, the company reported first-quarter earnings that were generally in line with estimates and benefited from a broader risk-on sentiment in the market as worries about a trade war and a weakening economy faded.

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According to data from S&P Global Market Intelligence, the stock finished the month up 47%. As you can see from the chart, shares surged on the Barron's report on May 22, but then gave up some of those gains the following week as bullishness in the stock seemed to fade following an Nvidia's earnings report that did not highlight quantum computing.

IONQ data by YCharts

Image source: Getty Images.

IonQ gets some positive attention

Quantum stocks generally rallied last month, as some investors bet that it could be the next big technology after artificial intelligence (AI), but IonQ, which is the most valuable of the group of quantum stocks, got a particular boost on May 22 thanks to the coverage in Barron's, as IonQ soared 37% that day.

In an interview with Barron's, CEO Niccolo de Masi said, "We're in the business of quantum just like Nvidia and Broadcom are in the business of classical GPUs," adding, "I believe IonQ will be the Nvidia player. There will be other people that copy us and follow us; they have always copied and followed us."

It was a bold statement coming from a company that earlier in May reported just $7.6 million in revenue in its first quarter, or less than 0.1% of what Nvidia and Broadcom reported.

IonQ also continues to lose money as it invests in its technology. In the first quarter, the company reported a generally accepted accounting principles (GAAP) net loss of $32.3 million, and an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $35.8 million.

Last month, the company also signed a memorandum of understanding (MOU) with Korea Institute of Science and Technology (KISTI), a technology research institute and supercomputing center. According to the MOU, the two companies will work together to collaborate in multiple areas to advance quantum computing.

Is IonQ a buy?

IonQ is now targeting revenue of $75 million-$95 million for the full year following its acquisition of Lightsynq, though justifying a market cap of $10 billion at that level of revenue seems difficult, especially when the company reported flat growth in the first quarter.

Investors bullish on quantum computing might consider taking a small position in the stock, but it could easily plunge, considering it's been bid up on mostly hype.

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Jeremy Bowman has positions in Broadcom and Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.