Executive Summary

Company Overview

Quantum Computing Inc. (NASDAQ: QUBT) develops room-temperature photonic quantum machines and thin-film lithium niobate (TFLN) chips for government, defense and telecom customers. It is the only pure-play public company in nonlinear quantum optics. The company has raised about $1.6 billion since November 2024, including a $750 million private placement in October 2025, and held $348.8 million in cash at 30 June 2025.

Rating

We initiate coverage with a SELL rating at a price of $21.78 (10 October 2025). The market capitalisation of about $4.8 billion is not supported by the company's reported revenue or by the value of its patent portfolio.

Investment Thesis

  • Valuation. QUBT trades at EV/Sales of about 492x and P/S of about 9,140x, against IonQ at 534x, Rigetti at 1,414x and D-Wave at 1,349x. The conservative NPV of its nine patents is about $101 million, roughly 2% of market capitalisation.
  • Fundamentals. Q2 2025 revenue fell 67% to $61K while the operating loss widened 93% to $10.2 million, as R&D rose 185% to $6.0 million. Revenue covers 0.54% of operating expenses.
  • Execution. Revenue, foundry ramp-up and commercialisation targets were missed or delayed over the last three earnings calls, and most orders remain small pilots with academic and government customers.
  • Governance and dilution. FY24 executive compensation was about 525% of revenue, the share count rose 51% year over year, and fraud litigation is ongoing.
  • Technicals. The weekly chart shows MACD exhaustion, with RSI down from 70 to about 55.

What Supports the Company

The TFLN platform has technical merit, government relationships are growing, and the balance sheet is strong with minimal debt. These factors lower the risk of financial distress. They do not close the gap between the current price and the cash flows the IP can plausibly generate from 2028 to 2030.

Risks to Our View

Government contracts, IP licensing agreements, strategic partnerships or acquisitions funded by the new capital could sustain the multiple. The stock gained 2,649% in one year, so momentum and volatility can keep the price above fundamental value for longer than expected.

Conclusion

The share price discounts commercial success years before revenue exists. We rate QUBT SELL and would revisit the view on evidence of recurring revenue or licensing income.