A short sale report indicated that the stock price of quantum computing corporation IonQ is excessively high compared to its corporate value. However, foreign individual investors are noted to have engaged in additional buying, claiming they would suppress the small short selling forces.
American short sale investor Kerrisdale Capital published a 23-page report on IonQ on the 13th (local time). Kerrisdale Capital said, "Although IonQ's stock price has retreated from its all-time high, it is still trading at a value reaching 40 times its projected revenue for 2026," adding, "However, we believe IonQ is far from achieving new commercial success."
Kerrisdale stated that IonQ has claimed it will increase its quantum bits (qubits) from the current level of about 80 to 100 to over 4,000 by 2026 and to 32,000 by 2028, but asserted that the technological limitations make this possibility very slim. They also noted that the development of "photonic interconnect," the key technology for connecting quantum computing modules, is delayed.
Kerrisdale said, "IonQ recently changed its chief executive officer (CEO) and announced revisions to its technology roadmap," adding, "This is evidence that the existing plans have not been progressing as expected."
Following the short sale report, IonQ's stock price fell by about 5.7% in the pre-market (Pre-Market·before market opening). Although the weakness continued during regular trading, there were also times when it reversed to gains, showing significant volatility. The stock closed down 2.06% from the previous day.
It is estimated that foreign individual investors have played a stabilizing role by engaging in additional buying. According to the Korea Securities Depository, domestic investors held IonQ stocks worth $1.54215 billion (approximately 2.24 trillion won) as of the 12th. This accounts for 32.7% of IonQ's total market capitalization. Foreign individual investors refer to core shareholders of IonQ.
Individuals holding IonQ stocks left posts certifying additional purchases on securities company communities and discussion forums overnight, stating, "Let's defeat the short sellers." They have their own reasons for confronting the short selling forces.
This is not the first short sale report. In May 2022, Scorpion Capital published a short sale report evaluating IonQ as a Ponzi scheme. At that time, the stock price fell even more sharply, but after three years, it had recovered to three times its previous level. This is the background of why investors who engaged in additional purchases responded, "We can hold out for 10 years."
Additionally, the nuclear technology corporation OKLO, for which Kerrisdale Capital released a short sale report last November, saw its stock price soar in the short term. Short squeeze is cited as the reason for the stock price increase. A short squeeze refers to a phenomenon where, contrary to the expectations of short sale investors, if the stock price rises, they buy stocks to mitigate their losses, resulting in further price increases.
In the process of drastic fluctuations in IonQ's stock price, many so-called "investors who are in the red" find no other option but to hold on. IonQ's stock price halved from its peak of $54.74 in January. The average loss rate for 48,839 IonQ investors connected to Naver Pay's "My Assets Service" is 23.86%. Nearly 60% of investors are in the loss territory.
It is uncertain how the battle between short sale investors and foreign individual investors will conclude. However, the recent continuous listings of quantum computing exchange-traded funds (ETFs) by domestic asset management companies include IonQ as a underlying asset, which is expected to increase the number of affected investors.
The first domestic quantum computing ETF, KIWOOM U.S. Quantum Computing, saw individual investors accumulate a net purchase of 95 billion won since its listing in December last year until the previous day. The newly listed KoAct Global Quantum Computing Active, SOL U.S. Quantum Computing TOP10, RISE U.S. Quantum Computing, and PLUS U.S. Quantum Computing TOP10 on the 11th have also shown a buying dominance of over 1.8 billion won by individuals until the previous day.