Quantum Computing Inc. (QUBT) shares plummeted 10.66% on Friday in a volatile trading session for the quantum computing sector. The steep decline was attributed to growing concerns over the company's elevated valuation and potential risks of equity dilution to fund its operations.
Despite trading at a seemingly low share price of around $11, QUBT boasts a market capitalization of approximately $1.4 billion. This valuation appears unjustified, considering the company's meager revenue of $386,000 over the last 12 months and its high cash burn rate. Analysts have cautioned that QUBT may need to raise additional capital through equity offerings to fund its operations, potentially diluting the stakes of existing shareholders.
With a limited cash balance of $3.1 million on its balance sheet, the company might have to turn to the capital markets sooner rather than later to sustain its operations. The concerns over QUBT's valuation and potential dilution risks have weighed heavily on investor sentiment, contributing to the stock's sharp decline on Friday.
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