So You Want to Buy Quantum Computing Stocks?

"IonQ aims to become the Nvidia of Quantum computing" and I want to become the Lionel Messi of midsized investing podcasts

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Quantum computing has been five years away from commercialization for the last 40 years. This time is no different.

The four pure-play quantum stocks (IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing - real creative name) have a combined market cap of $22.7 billion.

The companies generated $73 million in revenue over the past 12 months. That is a P/S ratio of 311. I think; I may be off by an order of magnitude.

Combined, these stocks burned $274 million in free cash flow over the past 12 months. Or, a negative cash flow margin in the hundreds of percent.

And you like these stocks? Seriously, I know some of you do. The click data I see from the Motley Fool doesn’t lie. Readers cannot get enough of the “quantum revolution.”

The problem with thematic plays like this is twofold:

1. The science being worked on is way beyond our comprehension. I cannot make sense of any of it.

2. Management is likely to be highly intelligent and persuasive.

A dangerous combination that will lead gullible investors astray. It is hard to be certain about the BS being spewed.

I personally cannot verify that these management teams are bullshitters. But they sure as hell are sounding the alarms.

IonQ’s CEO was in Barron’s for a short interview. It was packed with gems like these:

And this is just one article! 🚩🚩🚩🚩

As a reminder, Quantum computing is not reliable yet. There is no business model here. Research costs are through the roof, and you are competing with the balance sheets of Microsoft and Alphabet.

Good luck.

Generally, it is not hard to be a good investor. Just avoid obviously idiotic investments like quantum computing research stocks at 300x sales. Don’t buy Palantir at 100x sales. Or a small modular nuclear reactor company that doesn’t actually do anything. Or Tesla in 2021 (Or today).

It ain’t that hard. But some of you sure try to make it hard.

Resist the temptation. Stay the course, and don’t invest in the obvious bullshit dangling a carrot in front of your face.

-Brett