Context: Quantum computing is having its moment. It’s risky, but could massively disrupt industries in areas like computing, finance and cyber security. But stock market bubbles are forming.

Quantum computing is probably the most technically difficult industry for analysts to assess. Few people are equipped with an adequate understanding of quantum technologies, which is leading to massive mispricing.

Quantum Computing Inc is junk

Iceberg Research’s recent short report covers some of them. They note that the firm has run from one fad to another (chips, ai, computing) and failed at each. They list several misleading claims that they’ve made and withdrawn. The report is damning and raises serious questions about the future of the company, I encourage you all to read it.

However Iceberg does not go far enough.

https://iceberg-research.com/2024/11/27/quantum-computing-inc-the-phantom-chip-foundry/

They lack talent. Successful quantum innovations requires strong technical knowledge that you really can only come by in either leading universities or megacap firms like google.

I went through the Linkedin profiles of each of their employees and compared them with their small cap competitors. I tallied up the share of employees that went to an Edu Rank top-100 world universities for Quantum Physics (which is a very broad net), they rank incredibly poorly among it’s peers - less than a fifth of employees (see picture)*. This is robust to different ranking metrics. Counting only Ivy leagues they come out much worse.

But look, not all employees are on linkedin. And this is the next big underdog? No.

A large share of their “talent” comes from the Steven’s Institute of Technology, an unremarkable university in New Jersey (ranked 150 for Quantum Physics depending on list)

The company’s Chief Quantum Officer is Yuping Huang. On first glance he appears to have a prolific publishing history; however, most papers receive low citations and/or he is third, fourth or fifth author. Huang was previously sued by shareholders for breaching fiduciary duties when he merged his previous company with Quantum Computing Inc. Notably he is both a director and employee, which is a big corporate governance redflag (reminds me of Cassava Sciences).

There is only one independent director with a background in Quantum Physics to provide checks and balance on Huang — Dr Javad Shabani. He is not up to the task. His publishing history is mediocre.

Looking deeper, the Chief Technology Officer Yong Meng Sua, has an even more mediocre publishing history. And has only risen to an Assistant Professor role at Steven’s. He spends much of his time discussing esoteric computing questions tangential to his work (i.e. the NP=P problem, see their LinkedIn posts)

And finally the Director of the Company’s chip foundry (Iceberg has raised significant questions about the foundry). Dr Milan Begliarbekov after finishing high school enrolled in a bachelor’s degree in English literature at Steven’s, graduated, then immediately enrolled in a physics Phd at Steven’s. Either he is a savant polymath who is able to pick up grad school physics level math, or a Phd from Steven’s is worthless. His publishing career is very mediocre.

These scientists will not crack the major problems stopping widespread commercialization of Quantum tech. Simply compare their publishing records to the founder at Ion-Q (Peter Chapman) or leading quantum scientists at Google, alongside the significant and verifiable technological advancements these companies have made.

Another clue that something is amiss is headcount. Rigetti has three fold the number of employees. D-Wave six fold. All have similar market cap. What’s driving value? We’ve established that it’s not human capital. Iceberg’s research reveals it’s not intellectual property or physical capital either.

So why has it done so well? Regarded retail investors.

Only 3.3% of Quantum Computing Inc is held by institutional investors (and falling). Compared with ~40% for IONQ.

https://www.nasdaq.com/market-activity/stocks/qubt/institutional-holdings

The lack of institutional investment while institutional investors are simultaneously clamouring to load up on quantum stocks is a massive red flag. In fact no Wall Street analysts track them.

https://www.nasdaq.com/articles/quantum-computing-qubt-stock-skyrockets-short-sellers-are-lurking

So what happens next?

The 800% rise in one month is going to attract short selling interest as people realise it’s junk. The stock will fall back below $1.

Risk: If you want to short/buy puts, You can rest assured that the company is not going to suddenly become profitable. The main risk comes from why they’ve done so well, despite having little revenue, expertise, or innovation to show for it.

They’re literally called Quantum Computing Incorporated. If you’re a full regard wanting to invest in Quantum computing are you going to invest in IonQ (what?), Rigetti (spaghetti company?) or a company conveniently called Quantum Computing? It’s a regard trap.

It’s like being interested in electric cars and passing on Tesla because you wanted to invest in a stock called Electric Car Co.

My positions

1000 put contracts to sell @$4.50, cost average = 0.11, expiring Dec 20. If this doesn’t work I’m going to buy puts again and again. This company sucks.