IonQ Inc ( IONQ ) shares are facing some selling pressure Thursday following a short report from Kerrisdale Capital.

What To Know: Short seller Kerrisdale Capital announced a short position against quantum computing company IonQ on Thursday, citing valuation concerns following the stock’s recent surge.

“Despite retreating from all-time highs, shares still trade at a staggering 40x consensus 2026E revenue – a valuation that defies both logic and the warnings of former IonQ employees, who highlighted monumental scaling challenges that will derail the company's ambitious plans,” the short seller said.

Benzinga has reached out to IonQ for comment on the Kerrisdale Capital report.

IonQ shares are up approximately 134% over the past year. Kerrisdale believes the rally in IonQ has been driven by management claims about delivering on technical and commercial milestones. Kerrisdale said investors are focused on these “relatively immaterial past achievements” and are ignoring the scalability challenge.

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According to the short seller, IonQ has forecasted exponential growth from 80 to 100 physical qubits currently to more than 4,000 by 2026 and 32,000 by 2028.

The company believes it can use photonic interconnects to achieve said growth, but Kerrisdale argued that commercially viable photonic interconnects are still a long way away. The short seller noted that IonQ has never disclosed performance metrics for its photonic interconnect development.

“A year ago, IonQ claimed it was ‘on track to finish’ developing photonic interconnects by 2024, but industry executives we consulted confirmed that performance remains far below the threshold necessary for commercial scaling,” the short seller said.

“Rather than reflecting a strategic shift, the looming inability to deliver on growth promises is what has driven IonQ's ( IONQ ) recent pivot into quantum networking, the need to raise additional equity despite prior assurances to the contrary, and other material changes to its technology benchmarks, financial reporting, and management, as announced late last month.”

IonQ executive chair Peter Chapman stepped down from his role as CEO last month. Chapman has a history of making bold claims that “diverged from reality,” according to the short seller.

Chapman claimed IonQ had a perfect 32-qubit system in 2020, but Kerrisdale said a former IonQ executive told the short seller that the company only had an 11-qubit system at the time.

Kerrisdale went on to challenge other claims made by Chapman and pointed out that the former CEO has been selling shares. Kerrisdale said it’s a “glaring red flag” that the terms of the company’s at-the-market offering allowed Chapman to sell up to 2.2 million shares.

Kerrisdale said IonQ is a “cash-burning, highly promotional company in a hot sector valued at absurd revenue multiples.” As executives unload shares and retail investors continue to ignore scaling challenges, the short seller believes IonQ could be a “disaster in the making.”

“As reality sets in, IonQ shareholders chasing a quantum leap will find themselves wishing they had stayed in a more stable state,” the short seller said.

IONQ Price Action: IonQ shares were down 3.6% at $21.02 at the time of publication Thursday, according to Benzinga Pro.

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