IonQ stock price: Wyckoff model, double-top pattern says sell

on Oct 9, 2023
  • IonQ share price has formed a double-top pattern.
  • It has entered the distribution phase of the Wyckoff method.
  • The short-term outlook for the stock is now bearish.

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The IonQ (NASDAQ: IONQ) stock price has pulled back in the past few days as the recent momentum faded. The shares have pulled back from the year-to-date high of $21.65 to $15.22, giving it a market cap of over $3 billion.

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Good company but concerns remain

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IonQ is one of the fastest-growing companies in the technology industry. The firm is in the important sector known as quantum computing, which is expected to grow at a fast pace, as I wrote here. It is also building tools that are useful in the generative AI industry.

The most recent results showed that IonQ’s business was doing great as it started shipping its products. Revenue jumped by more than 110% in the last quarter to $5.5 million. This increase was bigger than its expected range of $4.1 million and $4.5 million. 

The company has also boosted its bookings in the past few months as companies position themselves for the era of quantum computing. Its bookings jumped to $52.5 million, up from the previous estimate of $50 million. 

Most importantly, IonQ’s research and development team achieved a record 29 algorithmic qubits ahead of schedule. It also recently expanded its relationship with the Air Force Research Lab.

The biggest concern among investors is the company’s valuation since it has a market cap of over $3 billion. This is a pricey valuation for a company that is expected to bring in more than $19 million in 2023 and $36.5 million in 2024.

However, historically, companies like IonQ and Nvidia tend to have premium valuations. For example, Nvidia has a PE ratio of 110, which is much higher than the S&P multiple of 23.46.

IonQ stock price forecast

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IonQ stock

IonQ chart by TradingView

I have been quite bullish on IonQ stock price in the past few months. Now, however, there are some technical concerns about the shares. For one, based on the Wyckoff model, the stock moved from the accumulation phase in May this year and entered the markup phase since then.

Recently, however, the stock seems to be in the distribution area. It has also formed a double-top pattern at the psychological level at $20. In price action analysis, this is one of the most accurate bearish signs in the market.

Therefore, while the long-term view for the company is bullish, there is a likelihood that it will have a bearish breakout soon. If this happens, the next level to watch will be the double top’s neckline at $12.26.

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