Why D-Wave Quantum Stock Just Fell

The Motley Fool · 1d ago

Key Points

D-Wave's Q2 revenue of $3.1 million missed estimates -- earnings missed too.
Operating expenses nearly doubled year over year, pushing the adjusted EBITDA loss to $37.1 million.
A $546 million cash cushion buys time, but the stock's lofty valuation looks hard to justify given the company's current results.
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D-Wave Quantum Inc. (NASDAQ: QBTS) shares fell 9.3% on Thursday. The S&P 500 slid 0.2%, and the Nasdaq Composite finished flat.

The quantum computing company missed Wall Street's estimates on revenue and earnings in its latest quarterly report.

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D-Wave misses estimates as costs nearly double

The company reported Q2 results before the market opened on Thursday. Revenue came in at $3.1 million, essentially unchanged from a year ago and short of the $4.1 million analysts were looking for. D-Wave's net loss also missed estimates, coming in $0.13 per share, compared to the $0.09 was expected.

Operating expenses climbed 93% from a year ago to $55 million, and the adjusted loss before interest, taxes, depreciation, and amortization (EBITDA) -- a rough measure of what the core business burns -- widened 85% to $37.1 million.

Image source: Getty Images.

Why the cash cushion isn't enough to win me over

D-Wave finished June with $546.2 million in cash reserve, which at the current burn rate buys it years of runway. That's a good thing when you're dealing in Quantum, a technology that could take many years to pay off.

Despite the cushion, I'm not a fan. I think investors have gotten far ahead of themselves, and D-Wave's nearly 500 price-to-sales ratio just does not pencil out.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.