Quantum Computing Inc

Quantum Computing Inc. (NASDAQ: QUBT) is a quantum software and hardware company. The Company is focused on providing integrated quantum information gathering, transmission, and processing solutions, including both the user interface software and the quantum hardware. The Company’s core product is Qatalyst, which enables developers to create and execute quantum-ready applications on conventional computers, while also being ready to run on multiple quantum computers.

Recent Financial and Business Updates:

Financial Highlights for the First Quarter of 2023

• Revenue: In the first quarter of 2023, the company earned approximately USD 121,000 with a gross margin of 53.3%, compared to USD 31,000 and a gross margin of 63.0% in the first quarter of 2022. The revenue came from a combination of commercial and government contracts, and the company-initiated technology commercialization during this period.
• Operating Expenses: Operating expenses for the first quarter increased by 16.7% year-over-year to USD 7.9 million. This rise was primarily due to higher salary expenses, although it was partially offset by reduced consulting and professional services costs. The company expanded its internal team and moved core responsibilities in-house.
• Cash Burn: The average monthly cash burn during the first quarter of 2023 was around USD 1.57 million, a 12% increase compared to the previous year's monthly average. The increase in cash burn was mainly attributed to additional quantum engineering hires following the QPhoton merger and higher marketing expenses to support product launches. The company expects the level of cash expenditure to remain relatively stable in the foreseeable future.
• Net Results: The company reported a net loss of USD 8.5 million in the first quarter of 2023, which includes approximately USD 985,000 in non-recurring, merger-related operating expenses, and financing costs. This represents a 19.2% increase compared to the same period in the previous year
• Total Assets: During the first quarter, total assets increased by USD 227,000 (0.25%) to reach USD 89.5 million, compared to the year-end balance on December 31, 2022. Cash also increased by USD 1.5 million during the first quarter of 2023, reaching approximately USD 6.8 million.
• Total Liabilities: In the first three months of 2023, total liabilities decreased by USD 1.8 million to approximately USD 12.6 million. The decrease was due to the company starting to repay its debt and associated interest, along with the satisfaction of final expenses related to the QPhoton merger.
• Shareholders' Equity: During the first quarter, shareholders' equity increased by USD 2.0 million (2.7%) to USD 76.9 million.
• Capitalization: As of March 31, 2023, the company had approximately 60.5 million shares of common stock outstanding, which increased by approximately 4.5 million shares from year-end 2022. The increase was a result of share sales through an At-The-Market (ATM) facility and shares issued as compensation for services related to the QPhoton merger. As of May 9, 2023, the company still has USD 93.3 million remaining on its shelf registration that became effective on November 8, 2022.
  

Subsequent Financial Developments: 

• As of May 9, 2023, the company has repaid USD 750,000 of principal and accrued interest on its unsecured Note, resulting in a cumulative total repayment of USD 1 million.
• The company issued 853,600 shares of restricted common stock with a two-year vesting period to thirty-five employees as an alternative to cash payment for their 2022 performance bonuses.
  

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance range of USD 1.40-USD 1.60, from where price has taken resistances in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction with targets of USD 1.80-USD 2.00. The RSI (14 period) momentum indicator is at a value of 48.40, with expectations of some consolidation. Moreover, the price is currently positioned between both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support and resistance levels respectively.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Quantum Computing Inc. (NASDAQ: QUBT) at the current price of USD 1.31 as of July 20, 2023, at 07:50 am PDT with further analysis once price breaks the mentioned resistance on the upside.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 20, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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