As every investor would know, you don't hit a homerun every time you swing. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. So we hope that those who held D-Wave Quantum Inc. (NYSE:QBTS) during the last year don't lose the lesson, in addition to the 70% hit to the value of their shares. That'd be a striking reminder about the importance of diversification. Because D-Wave Quantum hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 66% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
After losing 35% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
D-Wave Quantum wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year D-Wave Quantum saw its revenue grow by 19%. We think that is pretty nice growth. However, it seems like the market wanted more, since the share price is down 70%. It could be that the losses are too much for investors to handle without losing their nerve. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on D-Wave Quantum
A Different Perspective
We doubt D-Wave Quantum shareholders are happy with the loss of 70% over twelve months. That falls short of the market, which lost 21%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 66% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 5 warning signs we've spotted with D-Wave Quantum (including 4 which shouldn't be ignored) .
But note: D-Wave Quantum may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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