To The Moon

Why D-wave CEO Alan Baratz is "Dead Wrong" about Quantum Computing and "Super Desperate" for your money

[Update]: the day after this article was written, Mark Zuckerberg also back a similar stance and saw D-wave went down by 30%

After watching a lot of irrational traders trying to hype up Quantum after getting trapped under the recent dips, we decide to share the realities of Quantum computing (as someone who work in the tech industry).

It is important to be aware of shenanigans throwing terms like QFS around pretending that they know a thing or two. It's akin to throwing the term blockchain around to pretend to know crypto.

D-Wave’s Financial Struggles Trigger Need to Pump Excitement

High Debt-to-Equity Ratio shows that current stage of technology is still too expensive: D-Wave's debt-to-equity ratio has worsened significantly, from -1.44 in 2022 to -2.97 in 2023, and -3.23 in 2024. This indicates growing financial instability and a heavy reliance on debt as equity diminishes, suggesting the company operates under unsustainable financial conditions.

• Negative Profit Margins in Quantum Sector shows that it hasn’t reached economic of scale

◦ D-Wave’s profit margin of -783.28% highlights substantial losses, far from achieving profitability.

◦ Similarly, Rigetti’s -509.58% profit margin reflects systemic challenges within the quantum computing sector.

Both companies are burning cash at increasing rates, revealing an inability to balance operational expenses with revenue in this cost-intensive field.

Modest or Declining Growth shows clients aren’t adopting solutions and some are leaving due to unrealistic costs:

◦ D-Wave’s Growth: Despite some progress, D-Wave’s 14% YoY growth does not indicate the explosive adoption expected from a disruptive technology. This is more characteristic of a company in an early, experimental stage rather than a leader in a ready-to-scale industry.

◦ Rigetti’s Declining Revenue: Rigetti’s growth rates of -8.35% in 2023 and -19.05% in 2024 further highlight slow market adoption, countering claims that quantum computing is at a tipping point.

Quantum technology requires immense resources to develop and maintain, driving negative margins.Even though D-Wave has secured clients like Davidson Technologies, Mastercard, and VINCI Energies, these partnerships represent niche implementations rather than widespread industry adoption.

First Movers Aren’t Necessarily the Winners

• High Drop-Off Rate: Many quantum startups in the private space are burning cash at unsustainable rates, and most are unlikely to survive the next decade.

• Bigger Players Entering the Space: Established companies like Amazon and Google are watching the market closely and acquiring smaller quantum startups, posing significant competition.

Mass Adoption Will Take Time to Achieve Economies of Scale

• Parallel to AI Adoption: AI has existed for decades, yet mass adoption is still evolving.

◦ Mass adoption often requires an overhaul of old systems, which is a lengthy process.

◦ For institutions like banks, new technology adoption is slow due to their focus on security and robustness over trend adoption.