- D-Wave Quantum Inc.’s (QBTS) stock fell 3.28% to $7.13 in midday trading after a Kerrisdale Capital report criticized its $2 billion valuation and quantum annealing technology as commercially unviable.
- The report highlights D-Wave’s 600% stock surge and 57x 2026E revenue multiple, arguing its $9 million annual recurring revenue and lack of profitability reflect a technology with no proven advantage over classical methods.
- Kerrisdale cites customer feedback from logistics, manufacturing, and pharmaceuticals showing zero benefits, alongside a former engineer’s admission that D-Wave’s systems lack evidence of faster optimization.
D-Wave Quantum Inc. (QBTS) is facing intense scrutiny as its stock dropped 3.28% to $7.13 in midday trading, driven by a critical report from Kerrisdale Capital. The report, targeting D-Wave’s $2 billion market valuation, argues that the company’s quantum annealing technology is a commercial misstep in an industry increasingly favoring gate-model quantum systems. Kerrisdale highlights D-Wave’s stock surge of over 600% since last year, fueled by investor enthusiasm for next-generation computing, but labels its valuation – trading at over 57 times consensus 2026 estimated revenue – as unsustainable for a company with a peak annual recurring revenue of just $9 million and no clear path to profitability.
Kerrisdale’s critique centers on the limitations of D-Wave’s annealing architecture, which it claims offers no proven advantage over classical computing methods. The report cites a former D-Wave engineer who admitted there is no evidence that the company’s systems solve optimization problems faster than traditional alternatives. Interviews with D-Wave customers across logistics, manufacturing, and pharmaceuticals reportedly revealed zero tangible benefits from the technology, reinforcing academic studies that show, as per the report, minimal scaling improvements. This stagnation in customer growth, according to Kerrisdale, reflects a broader recognition that D-Wave’s approach is losing relevance.
Despite D-Wave’s efforts to position itself as a leader in quantum computing – in fact, D-Wave CEO Alan Baratz recently talked to Bloomberg about his company’s distinct approach to quantum computing, emphasizing that unlike others in the industry, D-Wave is already delivering practical applications for customers – the report suggests its technology is more hype than substance. With a stock price that has fluctuated significantly, like most in the sector, dropping from a 52-wkh of $11.95, D-Wave faces challenges in proving its commercial viability. As competitors like IBM (IBM) and Google (GOOG) advance gate-model systems, D-Wave’s reliance on annealing may hinder its ability to compete, leaving investors to question whether its quantum ambitions can translate into sustainable growth.
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