IonQ (NYSE: IONQ) stock price has been in a consolidation phase in the past few weeks as traders watched its performance. After soaring to a high of $21.58 in September last year, the stock has crashed by over 48% to the current $11.25, giving it a market cap of over $2.3 billion.

IonQ, a company building quantum computers, is seeing strong revenue growth and demand for its products. Results published this week showed that its total revenue rose by 60% to $6.1 million in the fourth quarter.

For the year, its revenue came in at $22 million, which was higher than its internal and analyst expectations. The same is true for the company’s bookings, which jumped to over $65.1 million.

These numbers mean that the company is growing as demand for its solutions jump. However, the company is still spending more money than its revenues. Its operating costs rose by 121% in the fourth quarter to over $60.4 million. They rose to $179 million for the full year as the firm continued investing in R&D.

As a result, its losses mounted even as the company started to recognize revenues in its income statement. Its net loss jumped to $41 million and $157 million in Q4 and FY. 

However, the management believes that 2024 will be much better as it slashes costs and boosts revenue. It expects that its revenue will be between $6.5 million and $7.5 million this quarter and about $41 million this year.

Still, there are concerns about the company’s valuation and the uncertainty of the US government funding. IonQ is highly overvalued considering that it is trading at 56x estimated sales of this year, which is not cheap.

This valuation gap is because investors expect its business to continue growing. If it hits its revenue target of $41 million, it means that its revenue growth for the year will be 86%. 

The other risk is that some substantial revenues are coming from the US government, which is trying to gain an edge in quantum computing. 

IONQ chart by TradingView

Turning to the daily chart, we see that the IonQ share price has remained in a tight range in the past few months. It has moved below the crucial resistance point at $12.16, its lowest swing in August last year. This price was along the neckline of the double-top pattern that formed between July and September.

IonQ stock has also moved below the lower side of Andrew’s pitchfork tool and the 50% Fibonacci Retracement level. It has also formed what looks like a small head and shoulders pattern, which is a popular bearish sign.

Therefore, the outlook for the stock is bearish, with the initial target to watch being at $9.20, which is about 18.40% below the current level. A break below that level will point to more weakness since it will invalidate the double-bottom formation.

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