Investors who bought into pure-play quantum computing leaders IonQ (NYSE: IONQ), Rigetti Computing (NASDAQ: RGTI), and D-Wave Quantum (NYSE: QBTS) in mid-July 2024 are sitting on potentially life-altering gains.
Shares of IonQ have more than quadrupled since that period, while Rigetti and D-Wave have surged by nearly 1,200% and 1,500%, respectively.
Professional and everyday investors remain excited about real-world quantum computing applications, including dramatically accelerating the learning curve for AI-driven large language models.
However, the individuals who know these three companies best appear to be sending a very different signal to the broader market.
Over the last five years, insiders at IonQ, Rigetti, and D-Wave have collectively sold just over $988 million worth of stock across the pure-play trio, according to aggregated Form 4 filings.
An insider is defined as a high-ranking executive, board member, or beneficial owner of at least 10% of a company’s outstanding shares who may possess non-public information.
Regulators require insiders to report all trades, including the exercising of option contracts, via Form 4 no later than two business days after a transaction occurs.
The selling has been accompanied by strikingly little buying, with insider purchases totaling just $3.35 million for IonQ, $625,000 for Rigetti, and just over $309,000 for D-Wave over the same five-year period.
While there are many legitimate reasons executives may sell shares, including diversification, personal financial planning, or fulfilling tax obligations from options exercises, analysts note there is only one reason to buy: the belief that shares will head higher.
The near-absence of insider buying raises the question of whether company leadership views its own stock as a bargain at current price levels.
Valuations across the quantum computing sector remain a significant concern, with price-to-sales ratios sitting firmly in what many analysts describe as bubble territory based on historical precedent.
Game-changing technologies have carried a troubled early-stage track record since the mid-1990s, and quantum computing appears no exception to that pattern at this stage of development.
Quantum computers remain years away from being more cost-effective than classical computers, meaning this trio is likely to continue losing money, burning cash, and trading at arguably unjustifiable price-to-sales ratios in the near term.
The disconnect between soaring retail enthusiasm and persistent insider selling presents a critical consideration for investors weighing further exposure to the quantum computing sector.
