Why IonQ Stock Crashed 31.6% In July
Key Points
Quantum stocks, such as IonQ, were falling in August.
The company is growing quickly but is highly unprofitable.
Its high market cap and aggressive shareholder dilution should keep investors away for now.
Shares of IonQ (NYSE: IONQ) crashed 31.6% in July before rebounding in August, according to data from S&P Global Market Intelligence. Quantum stocks crashed along with the artificial intelligence (AI) trade last month, and IonQ was no exception.
The quantum computing upstart reported its earnings in early August, and the stock is reacting well to the news. Still, shares are down 47% from all-time highs set in late 2025. Here's why IonQ stock fell in July, and whether you should buy shares today.
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Quantum growth troubles
Last year, quantum computing stocks became the talk of the stock market. IonQ -- a leading pure-play developer of quantum technologies -- is a stock that led the charge in this rally, rising from under $10 to $80 within a year, driven by executive orders and Wall Street price target increases.
Today, shares have fallen to $43. Nothing has changed about the business, which is still in the early start-up phase as it works to improve its quantum computing technologies. In July, the stock slipped amid strong insider selling and waning enthusiasm for high-risk stocks.
IonQ reported Q2 earnings in early August, reporting strong revenue growth but heavy losses for its quantum computing technology. Again, this technology is still in its very early days, with struggles to make it work properly for commercialization. Revenue grew to $80 million last quarter, but the company reported an operating loss of $337 million.
Image source: Getty Images.
Should you buy IonQ stock on a rebound?
IonQ has sought to capitalize on its rising share price to raise capital and now has $3 billion in cash and equivalents on its balance sheet. This has come at the expense of its outstanding shares, which have nearly doubled over the last three years, a headwind to per-share value creation.
This is a lot of capital to keep investing in quantum computing research, but it only gives IonQ a few years of runway at its current burn rate of $570 million in free cash flow, a figure that keeps getting worse every quarter despite scaling revenue.
Even if IonQ can start generating true profits from its quantum computing technology -- something that is many years away -- shares trade at a high price right now. It has a market cap of $17 billion vs. guidance for $285 million in revenue this year, or a forward price-to-sales ratio (P/S) of 61. That is not cheap, and should keep investors from investing in IonQ shares.
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends IonQ. The Motley Fool has a disclosure policy.