IonQ stock price is in a bear market ahead of earnings: Is it a buy?

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Written on Aug 9, 2023

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IonQ share price has entered a bear market after falling by 23% from YTD high.
The stock remains about 400% above the lowest level this year.
The quantum computing company will publish its financial results on Thursday.

IonQ (NYSE: IONQ) stock price has suffered a harsh reversal in the past few days as investors position themselves for the upcoming earnings. The shares dropped to a low of $14.8 on Tuesday, which is ~23% below the highest level this year. This means that the shares have moved into a bear market.

IonQ earnings ahead

IonQ is a small and fast-growing technology company valued at over $3 billion. The company builds quantum computing products, which are available in leading platforms like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud.

IonQ is attempting to disrupt one of the biggest emerging industries in the tech sector. Analysts believe that the total addressable market of quantum computing will get to over $65 billion by 2030.

The most recent results showed that the company’s revenue jumped in the first quarter. Bookings rose to $4.1 million, which is great progress in line with the full-year guidance of between $38 million and $42 million. In a recent note, the company boosted its guidance to between $45 million to $55 million.

As I wrote here, the company said that its operating costs and expenses rose to over $32.3 million. Its sales and marketing costs rose to $2.7 million in the quarter.

Analysts expect the company’s business did well in Q2 as it ramped up its production and deliveries. Estimates are that its total revenue rose to $4.36 million in Q2 as its GAAP EPS dropped to 13 cents.

In all. IonQ expects that its total revenue for the year will be $29 million. It will then rise and hit $64 million in 2025 and over $1.02 billion in 2028.

IONQ revenue guidance

Another positive thing for IonQ stock is that it has a first-mover advantage in quantum computing. If the industry growth continues, the company will likely see more demand in the coming years.

IonQ stock price forecast

IONQ chart by TradingView

In my recent article on IonQ, I wrote that the shares would continue rising. This view was accurate as the shares jumped by 115% to the highest level this year. Despite the recent retreat, the stock is still about 400% above the year-to-date low.

The stock has moved slightly below the important support at $15.40, the highest level on March 21st. It remains above the 50-day and 100-day moving averages, signaling that bulls are still in control.

Therefore, the shares will likely bounce back after the company publishes its financial results. If this happens, the next level to watch will be at $17.70 (14th February high). The alternative scenario is where the stock drops to the next support at $11.72, the highest level on May 22nd.