Quantum Corporation (QMCO) stock dropped more than 40% on Thursday as the market adjusts to what may have been an overreach on the latest quantum computing rally.
Less than a month ago, shares of Quantum Computing were trading under $3, but suddenly shot to an all-time high above $60 following the surge of interest in quantum computing stocks. The 1,500% rally may have been a misstep by investors looking to grab any stock associated with quantum computing.
Investors looking a little deeper would find that Quantum Corporation has very little, if not no, connection with quantum computing. The $100 million company is an advanced data storage company that focuses on video storage among other things.
Quantum does have a newer offering that focuses on enhancing AI, but the company does not currently have specific products focused on quantum computing.
Quantum Computing’s stock saw record volume in November as the first round of speculators rushed into the stock driving the price 700% higher in just four days. For the next two weeks, volume remained subdued as the stock continued its rise, suggesting that the buying pressure was weak after the initial surge.
Wednesday’s final push to $60 was supported by another round of heavy volume, but interest has already declined as QMCO shares dropped to $35.
Investors should expect the stock to continue it’s drop to a short-term price range of $15-$20 before another round of speculative buying may come in.
Quantum computing’s breakneck rise is an example of the market’s froth for speculative names, possibly suggesting wider problems for technology stocks as investors are likely to begin tempering their excitement.
