Korean Investors Sold, but the "Tremendous Potential" Drives Quantum Computing Leader's Sharp Rally [Business & Issue]

Korean Individual Investors Sell 5.7 Trillion Won
Stock Surges 265% from March Low
Expansion into Defense Sector Boosts Quantum Technology Prospects

AionQ Homepage

Shares of IonQ, widely regarded as the leading quantum computing company in the United States, have recently been drawing renewed attention as their price continues to rise. Earlier this year, IonQ’s stock struggled as negative outlooks on quantum computing development led domestic investors to sell off nearly 6 trillion won worth of shares. However, as IonQ’s quantum technology has recently begun to expand into the defense and security sectors, the stock price has surged more than 2.6 times from its March low. Experts caution that, until quantum computers are commercialized, it will be difficult for the company to deliver results that justify such a sharp rise, and thus advise investors to proceed with caution.

Korean Investors Sold Nearly 6 Trillion Won This Year... Sharp Rebound After Hitting Bottom

On September 18 (local time), IonQ’s share price on the Nasdaq closed at $66.81, marking a six-day consecutive rally since September 11. Since the 11th, the stock has risen by 42% in a short period. Compared to the annual low of $18.27 recorded on March 10, the price has soared by 265.68%.

IonQ’s stock had been sluggish for some time after the beginning of the year, as negative outlooks suggested that the commercialization of quantum computers would not happen quickly. On January 8, Jensen Huang, CEO of Nvidia, stated in an interview that it would take “20 years for a useful quantum computer to emerge,” and the stock continued to decline until March.

Domestic investors, known as “Korean Ants,” also sold off large quantities of IonQ shares this year due to pessimism about quantum computing. According to the Korea Securities Depository’s foreign securities settlement data, from the beginning of the year through September 18, Korean investors sold $4.11106 billion (about 5.7 trillion won) worth of IonQ shares. This was the third-largest sell-off among all overseas stocks, following Tesla and Nvidia.

Founded in 2015, Quantum Computing Leader... But Performance Remains Weak

IonQ Homepage

IonQ is a quantum computing development company co-founded in 2015 by Christopher Monroe, a professor at the University of Maryland, and Kim Jungsang, a professor at Duke University. According to CNBC, IonQ is working to commercialize quantum computers using the so-called “Ion Trap” method, which traps ions using electromagnetic fields. While development is still ongoing, successful commercialization is expected to yield computers with dramatically improved processing speeds compared to conventional digital computers.

Since being listed on the Nasdaq in October 2021, IonQ has been regarded as the leading company in the U.S. quantum computing sector. The company occupies a unique position in ion trap quantum computing technology, attracting significant investment. In July this year, IonQ successfully completed a $1 billion (about 1.4 trillion won) paid-in capital increase, and its current cash holdings are estimated at $1.6 billion.

However, the company’s performance remains weak. Last year, IonQ posted a net loss of $331.6 million, and losses have continued to widen this year. The company recorded a net loss of $32.3 million in the first quarter and $177.5 million in the second quarter. As investments in quantum computing technology development continue, it is expected that performance will not improve significantly until quantum computers are commercialized and sales are realized.

Collaboration With U.S. Government, Expansion Into Defense and Security Sectors a Positive... "Investors Should Remain Cautious"

Reuters Yonhap News

The main driver behind IonQ’s recent sharp rebound has been its expansion into the defense and security sectors. With the U.S. government leading the way, demand for quantum technology in security is expected to support not only increased revenue but also further technological investment.

On September 10, IonQ announced the establishment of “IonQ Federal,” an organization dedicated to collaboration with the U.S. federal government. IonQ is developing quantum technologies for defense and cyber security applications in partnership with U.S. defense agencies such as the Air Force Research Laboratory and the Defense Advanced Research Projects Agency (DARPA). Recently, IonQ was awarded a contract by the U.S. Department of Defense to design a networked quantum computing system, and it also signed a memorandum of understanding (MOU) with the Department of Energy to advance quantum technology in the space sector. The total value of IonQ’s government-related contracts amounts to $100 million.

Nevertheless, experts warn that investing in IonQ and other quantum computing companies based solely on the recent stock rebound could be risky. In an interview with MarketWatch, Sean O’Hara, president of Pacer ETFs, said, “Quantum computing stocks have recently risen across the board, but that alone does not guarantee continued strong performance,” adding, “Even though the quantum computing sector has tremendous potential, it is still in its early stages, and there is no clear timeline for commercialization.”