IonQ (NYSE: IONQ), a quantum computing company founded in 2015, has taken investors on a wild ride this year. The stock has surged 112% in the past month and is now up 40% year-to-date after rebounding almost 180% from its 52-week low in August. This impressive momentum has left investors wondering if it’s time to sell or if the stock has more room to run. Let’s dive into IonQ’s business and growth prospects to understand better whether it’s a buy, sell, or hold.

What Is IonQ?

IonQ is a leader in the quantum computing industry, leveraging trapped-ion technology, which is a promising approach to building scalable, fault-tolerant quantum computers. Unlike traditional computers that rely on binary bits, quantum computers use qubits to represent both values simultaneously. This allows them to perform computations at exponentially faster speeds, with significant applications in artificial intelligence, cybersecurity, and drug development.

The company’s breakthrough technology has made it a key player in the race to unlock the full potential of quantum computing. In 2021, IonQ announced that it had developed the world’s most powerful quantum computer with a quantum volume of 4 million. In addition to developing cutting-edge technology, the company is scaling production through a factory that will produce quantum computers on an assembly line. Its upcoming Forte Enterprise quantum computer, which can operate without ultra-low temperatures, could unlock new markets and accelerate adoption.

IonQ currently has a market cap of $3.6 billion, with 189 million shares in free float and an average daily volume of 6.9 million shares.

IonQ's Rapid Growth Amid Industry Infancy

Though quantum computing remains in its infancy, IonQ’s performance suggests the company is ahead of the curve. The industry still has a long way to go before achieving widespread commercial viability, but IonQ is inching closer to profitability. Its Q2 2024 earnings, reported on August 7, showed a loss of ($0.18) per share, beating analyst expectations by $0.04. Revenue for the quarter came in at $11.38 million, surpassing estimates of $8.66 million, with a year-over-year increase of 106%.

The company’s ability to double revenue every year since 2021 reflects strong growth potential. Analysts believe this pace will continue for the next few years, driven by rising demand across various industries. IonQ also recently secured a $54.5 million contract from the U.S. Air Force Research Lab to develop scalable quantum systems over four years. With $72.8 million in bookings year-to-date, IonQ remains on track to meet or exceed its 2024 guidance of $75-$95 million, marking the third consecutive year of doubling its bookings.

IonQ’s Momentum in Quantum Computing Draws Investor Interest

IonQ’s momentum and leadership in quantum computing make it an attractive play, but caution is warranted. Analysts maintain a Moderate Buy consensus rating, with three buy recommendations and one hold. However, the average price target implies a potential downside of nearly 30%, suggesting the stock may have run ahead of its fundamentals. Institutional investors are still bullish, with $124 million in net inflows over the past 12 months compared to $58 million in outflows.

While IonQ’s long-term prospects are promising, the stock is currently overbought with an RSI near 80, indicating a potential short-term pullback. Given the elevated short interest and strong momentum, investors may see further upside in the near term, but chasing the stock at these levels carries risk. Long-term investors would be better served by waiting for a pullback rather than buying into the current rally. Meanwhile, those already holding the stock might consider locking in profits, as IonQ’s sharp rise makes it vulnerable to corrections.

IonQ’s position as a quantum computing leader offers significant growth potential, but the stock’s recent surge suggests short-term caution. Investors should keep an eye on its upcoming earnings and potential pullbacks for better entry points while staying mindful of the company’s long-term promise.