D-Wave Quantum Shares Face Continued Pressure Following Mixed Earnings

D-Wave Quantum shares extended their decline for a third consecutive session, closing at $26.40 after an 8.9% drop. This persistent selling pressure stems from the quantum computing company's recent quarterly report, which revealed substantial losses despite recording impressive revenue growth. Investors appear focused on the company's escalating costs, even as it celebrates achieving record sales figures.

The company's third-quarter results, released November 6, present a complex financial picture. While revenue doubled to reach $3.7 million, net losses expanded dramatically to $140 million—a 516% increase year-over-year. This widening deficit was primarily driven by $121.9 million in warrant valuation losses.

Amid these challenges, several positive indicators emerged. The gross profit margin showed significant improvement, climbing to 71.4% compared to 55.8% in the same period last year. Additionally, the company's liquidity position strengthened considerably, with cash reserves surging to $836.2 million—representing growth exceeding 2,700% from the previous year.

Chief Executive Officer Alan Baratz expressed confidence in the company's trajectory, stating, "Our strong third-quarter performance reflects the momentum we are building across all business areas."

Strategic Contracts Fuel Commercial Expansion

D-Wave's commercial progress is evidenced by several significant contract wins. The company secured a €10 million agreement in Italy and added prominent new clients to its portfolio, including a major U.S. airline, semiconductor manufacturer SkyWater, and the pharmaceutical division of Japan Tobacco.

Should investors sell immediately? Or is it worth buying D-Wave Quantum?

Notably, the Advantage2™ system deployed in Alabama is already being utilized for U.S. government applications, with particular emphasis on defense-related projects.

Warrant Expiration Creates Additional Headwinds

Market sentiment faces additional pressure from the impending November 17 expiration deadline for public warrants. The company had already realized $39.9 million from warrant exercises during the third quarter, followed by an additional $21.3 million through early November.

Despite recent share price weakness, analyst sentiment remains favorable. The consensus recommendation stands at "Strong Buy" with an average price target of $27.36. Investment firm Benchmark maintains its "Buy" rating with a $35 target, suggesting the company is progressing toward "broad commercialization" of its technology.

The long-term outlook for the quantum computing sector appears promising. According to Boston Consulting Group projections, the industry could generate between $450 billion and $850 billion in economic value by 2040. As the first commercial provider of quantum computers, D-Wave appears strategically positioned to capitalize on this growth potential, notwithstanding near-term operational challenges.