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Which Quantum stock? Avoid Quantum Computing Inc
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Following on from my recent DD on Quantum Computing Inc (QCinc), a lot of messages and a 70% rise in share price that has cooked my puts, I decided I'd dive a bit deeper

QCinc does not have leading quantum physicists or innovation.

Monroe has more talent in his pinky

Similar to when evaluating biotechs, in the quantum computing industry you need to consider the academic and publishing background of employees. Quantum Computing is a pioneering area of science, innovations are typically borne out of research conducted by universities and research centres that are published and reviewed. As I explained in my past post, QCinc's staff did not attain their Phds at leading universities (something which is very important given the quantum computing academic field is relatively small and nascent). Furthermore, even if you thought they might be diamonds in the rough - their publication records indicate that they are abysmal researchers (see above). The citation count of QCinc's entire (quantum) employee count is unable to match the citation count of individual founders from competing firms. This is a clear indication that their 'innovations' and patents are likely to fail commercially.

For every technical staff member at QCinc, there is $42million in market capitalisation.

Bearish signal: Big capital raises and no hiring

Furthermore, even if I was agnostic on education and publishing background, just from a headcount perspective, they do not have the people. They are the smallest of the four leading small cap quantum firms. And despite capital raises, including a recent $50 million capital raise and booming stock price, they have not shown signs of new hiring. The current market cap of $1.33 billion appears unsustainable, and works out to $42 million per technical staff member - that's more than my dad made in his entire life.

Where has the money gone?

If you believe what the company is saying, the money from their recent capital raises are going into a foundry dedicated to processing thin-film lithium niobate (TFLN) chips for use in quantum computing.

There are a number of commercial lithium niobate suppliers, and unlike what they claim on their website, suppliers do exist in countries other than China - see SwitzerlandUSAUK. Given the relative obscurity of QCinc's employees, it is unlikely that they'll manage to either make functioning chips (which they are already falling behind on) or beat out their competitors who possess significantly more valuable patents, better manufacturing capability and greater commercial links (i.e. with Amazon, Nvidia, Google).

Also here is what Quantum Computing Inc’s foundry looks like, which notably Iceberg Research exposed them for lying about its size.

But would QCinc really mislead investors

QCinc has pivoted many times during its history: from beverage company, to quantum software, artificial intelligence, and now quantum chips. It naturally begs the question, should potential investors believe QCinc's claims? Milan Begliarbekov, the chip foundry director, sums up my concerns quite well on his LinkedIn:

https://preview.redd.it/oknooap3gb7e1.png?width=458&format=png&auto=webp&s=1ec0d53479402d26004450e19658b4a6aa7d735e

My advice: Do not invest. The bubble will pop, but when is a difficult question to answer.

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