IonQ stock responds to 'false, misleading' short seller report
A day after a short seller report accused IonQ of losing "vital Pentagon contracts" that were responsible for 86% of its revenue from 2022-2024, the company responded by saying that the report contains "substantial misrepresentations" about its relationships with the US government.
According to Wolf Pack Research, the bipartisan Congressional budget for FY 2026 reveals that IonQ's "funding for their largest Pentagon contract is, for the second consecutive year, completely gone."
And the loss of funding for the contracts has left a "54.6 million black hole in its expected quantum computing revenues," according to the report.
Wolf Pack also accuses CEO Niccolo de Masi of trying to "backfill IONQ's lost money from the Pentagon" by making acquisitions in "subpar non-quantum computing businesses."
But on Thursday, IonQ pushed back on the report in a statement to Fortune, claiming that it "contains false, misleading, and unsubstantiated claims from a short-seller that is attempting to profit by driving down the price of IonQ shares."
IonQ's stock fell 8.1% on Wednesday following the release of Wolf Pack's report. It plunged nearly 14% on Thursday, wiping out about $3 billion in market cap over the course of a day.
"The report has substantial misrepresentations as to IonQ’s government relationships, business strategy, and financial sustainability," the statement continued. "IonQ is continuing to advance our position as the world’s leading quantum company."
It added that its “recent agreement to acquire SkyWater Technology is evidence that IonQ is a trusted ecosystem partner to the U.S. government, allied nations, and industry collaborators.”
In its report, Wolf Pack called the deal for SkyWater, which is the largest U.S.-based pure-play semiconductor foundry, "particularly puzzling and shatters the idea IONQ is a quantum pure-play."
By making acquisitions for companies outside the quantum space, Wolf Pack questions whether IonQ really is making as much "progress developing and commercializing a quantum computer" as it claims.
Short-sellers have doubts about IonQ's progress
This is not the first time that IonQ has been the target of a short-seller's report.
Last March, Kerrisdale Capital released a report in which it said that a "cash-burning, highly promotional company in a hot sector valued at absurd revenue multiples, with retail investors piling in and ignoring critical scaling challenge – even as the CEO unloads $37m worth of stock – are hallmarks of a disaster in the making."
Kerrisdale called IonQ's valuation one "that defies both logic and the warnings of former IonQ employees, who highlighted monumental scaling challenges that will derail the company’s ambitious plans."
"We believe IonQ is far from being on the verge of a new era of commercial success with its limited, error-prone systems," the firm wrote. "Instead, investors seduced by IonQ’s claimed 'history of delivering on technical and commercial milestones' are fixated on relatively immaterial past achievements, while ignoring the existential challenge all early-stage computing companies face: scalability."
Kerrisdale called quantum computing "an industry that has long been plagued by overpromises and hype," and de Masi, who took over as CEO of IonQ last February, has been known to talk a big game.
Speaking at a Morgan Stanley conference last March, about two weeks after Kerrisdale published its short report, de Masi said that the company considers itself "to be the 800-pound gorilla of the quantum computing business.”
“We have 933 patents – 400 in networking, 500 in computing," he said. "And we continue to build that momentum and that moat with every customer in every geography we're in.”
Fortune notes that short-sellers have been going after IonQ since 2022, when Scorpion Capital published a report in which it called the company's quantum technology "a hoax."