Will The Q4 Results Save IONQ Stock After A 20% Plunge?

The quantum computing company – IonQ (NYSE:IONQ) – is set to report its earnings on Feb 26, 2025. The company generates revenue primarily through its Quantum Computing as a Service (QCaaS) offerings. IonQ is expected to significantly reduce its loss per share to $0.12, compared to $0.24 last year, on projected sales of $10.3 million (+68% YoY), according to consensus estimates.

The company has $6.7 Bil in current market capitalization. Revenue over the last twelve months was $37 Mil, and it was operationally loss-making with $-209 Mil in operating losses and net income of $-172 Mil. While a lot will depend on how results stack up against consensus and expectations, understanding historical patterns might just turn the odds in your favor if you are an event-driven trader. There are two ways to do that – understand the historical odds and position yourself prior to the event, or look at the correlation between immediate return and medium-term return post earnings and position yourself accordingly post-event.

IonQ’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post earnings returns:

In the past 5 years, 14 earnings data points recorded, with 7 positive and 7 negative one-day (1D) returns observed. In summary, positive 1D returns seen about 50% of the times.
However, this percentage has decreased to 46% if we consider last 3 year data instead of 5.
Median of the 7 positive returns = 20%, and median of the 7 negative returns =-3.1%

Additional data for observed returns 5-days (5D), and 30-days (30D) post earnings are summarized along with the statistics, in the table below.

Correlation Between 1D, 5D and 30D Historical Returns

A relatively less risky strategy (though not useful if correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has highest correlation and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to correlation between 1D post-earnings returns and subsequent 5D returns.

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