Investing.com -- Shares of IONQ Inc (NYSE: NYSE: IONQ ) fell 4% today after Kerrisdale Capital identified the quantum computing company as a short target. The investment management firm released a detailed report criticizing IonQ’s valuation, scalability challenges, and transparency to investors.

Kerrisdale Capital’s report expressed skepticism about IonQ’s lofty growth projections and questioned the viability of its technology. The firm highlighted that despite IonQ’s claims of significant technical and commercial milestones, the reality is a company struggling with scalability. IonQ’s stock has been on a downward trend after the report brought to light concerns about the company’s ability to meet its ambitious goals.

The report pointed out IonQ’s forecast to increase its physical qubits from approximately 80-100 today to over 4,000 by 2026 and 32,000 by 2028. However, Kerrisdale Capital argued that the company’s reliance on photonic interconnects technology, which is critical for scaling its trapped-ion computing modules, is still far from reaching commercial viability. The investment firm also noted that IonQ has not been transparent with investors about the development status of this technology, citing recent academic data that shows continued inefficiencies and slow speeds.

Furthermore, Kerrisdale Capital accused IonQ of a lack of transparency, a trait that has been recognized within the industry. The report included claims of the company’s recently departed CEO making bold, yet unaligned with reality, predictions about the company’s capabilities. It also highlighted concerns from experts about the gap between IonQ’s market reputation and its actual standing within the industry.

The report concluded with a stark warning to investors, describing IonQ as a "cash-burning, highly promotional company in a hot sector valued at absurd revenue multiples." It suggested that the company’s stock, which has attracted retail investors, is facing critical scaling challenges that are being overlooked.

As the market digests the information from Kerrisdale Capital’s report, IonQ’s stock movement today reflects growing investor concern about the company’s future performance and the potential overvaluation of its shares.

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