Over the last six months, IonQ’s shares have sunk to $34.84, producing a disappointing 17.1% loss - a stark contrast to the S&P 500’s 9.8% gain. This may have investors wondering how to approach the situation.

Following the pullback, is now a good time to buy IONQ? Find out in our full research report, it’s free.

Why Does IonQ Spark Debate?

Founded by quantum physics pioneers from the University of Maryland and Duke University in 2015, IonQ (NYSE: IONQ) develops quantum computers that process information using trapped ions to solve complex computational problems beyond the capabilities of traditional computers.

Two Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last four years, IonQ grew its sales at an incredible 251% compounded annual growth rate. Its growth surpassed the average business services company and shows its offerings resonate with customers.

2. Adjusted Operating Margin Rising, Profits Up

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

IonQ’s adjusted operating margin rose over the last five years, as its sales growth gave it operating leverage. Although its adjusted operating margin for the trailing 12 months was negative 298%, we’re confident it can one day reach sustainable profitability.

One Reason to be Careful:

Cash Burn Ignites Concerns

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

IonQ’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 356%, meaning it lit $355.60 of cash on fire for every $100 in revenue.

Final Judgment

IonQ’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at $34.84 per share (or a forward price-to-sales ratio of 66×). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free.

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