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While the progression of computing technologies is a given, the groundwork for upward mobility depends on extracting greater performance metrics over a smaller physical space. However, semiconductors can only get so small before they encounter a pure scientific limitation. To get around this problem, the tech sector will require a whole new rethink — and it’s getting just that through quantum computers.
Harnessing what MIT Technology Review describes as “the almost-mystical phenomena of quantum mechanics to deliver huge leaps forward in processing power,” quantum-based machines stand poised to render modern — and possibly future — supercomputers to second-class status. But with great power comes great responsibility, which is where the initial public offering (IPO) of Arqit Quantum arrives on the scene.
Specializing in next-generation encryption services, Arqit Quantum develops paradigm-altering solutions to prevent the machines of tomorrow from inflicting catastrophic data breaches. As such, this could be among the most important IPOs to consider.
When is the Arqit Quantum IPO Date?
Though a promising company with arguably the substance to justify a traditional IPO, Arqit Quantum instead is merging with a special purpose acquisition company (SPAC), in this case, Centricus Acquisition Corp (NASDAQ: CENHU). Based in the U.K., Centricus booked its entry on the IPO calendar on Feb. 4, 2021, when its shares began trading on the Nasdaq Capital Market.
Under the terms of the deal, Centricus offered 30 million shares at a price of $10 per unit. The SPAC offered 5 million more units than originally planned. Deutsche Bank (NYSE: DB) acted as lead bookrunner for the proceedings.
Later, on May 12, Centricus announced that it will combine with Arqit Quantum, emphasizing during the disclosure the groundbreaking potential of the target enterprise. Specifically, the SPAC articulated the importance of QuantumCloud, Arqit’s proprietary quantum encryption technology which “makes the communications links of any networked device secure against current and future forms of hacking — even an attack from a quantum computer.”
According to a public statement covering the deal, Centricus provided up to $400 million in gross proceeds to Arqit, including funds from a fully committed private investment in public equity (PIPE) offering. Partnering in this initiative were Virgin Orbit, Sumitomo (OTCMKTS: SSUMY) and SPAC sponsor Heritage Group.
Following shareholder approval of the business combination between Arqit and Centricus, the respective management teams expect Arqit to make its debut on Sep. 7. Assuming all goes well, shares will trade on the Nasdaq exchange under the ticker symbol ARQQ.
Before you get too excited about the new offering, prospective buyers should recognize that post-merger SPACs have underperformed benchmark indices this year, despite the investment vehicle generating substantial buzz since roughly the summer of 2020. Much of this red ink can be tied to the dilutive effect of SPACs; namely, the exercising of warrants and SPAC sponsors selling their sizable equity stake in the target business combination.
Arqit Financial History
At first glance, the financials for Arqit Quantum don’t exactly scream buy — perhaps part of the reason why, just 1 day prior to ARQQ stock debuting on the Nasdaq under its own brand identity, CENHU shares stumbled 5.5%. On a year-to-date basis, the SPAC’s equity unit that will soon be ARQQ has shed 20%.
With a projected end-of-2021 revenue tally of $14 million, along with a gross profit of $10 million, it appears to onlookers that ARQQ stock is overpriced. Keep in mind that with the SPAC-based IPO and the PIPE commitment, the $400 million raise assigns a valuation of $1 billion for Arqit. Frankly, investors needed to see more than just a few million dollars of sales for their risk exposure.
Granted, the situation doesn’t improve that much for the following year, with Arqit’s management team anticipating revenue of only $32 million. Indeed, it’s not until 2024 and 2025 when the company expects to ring up serious sales numbers of $402 million and $660 million, respectively. But that’s a long wait, presenting opportunity costs for otherwise interested buyers. However, it may be premature to throw in the towel just yet.
Unlike traditional computers and smart devices which rely on bits — a stream of electrical or optical pulses representing 1s or 0s per MIT’s definition — quantum computers use “qubits,” which are typically subatomic particles such as electrons or photons.
Further, MIT states that “qubits have some quirky quantum properties that mean a connected group of them can provide way more processing power than the same number of binary bits.” This added processing capacity makes quantum machines radically utilitarian, promising to “power exciting advances in various fields, from materials science to pharmaceuticals research.”
Of course, such power in the wrong hands could cause unfathomable devastation to global economies. Among the possible steaming wreckages coming our way, Rand Corporation notes that quantum machines “could break the cryptographic codes that currently protect our data.”
Future proofing this threat is an absolute necessity, which is exactly what Arqit sets out to do.
Arqit Quantum Potential
In many ways, quantum machines are to modern computers what the automobile was to the horse. Essentially, the entire framework of transportation changed with this innovation and along with it, an entirely new infrastructure to accommodate the groundbreaking technology. While the quantization of computing networks is an exciting proposition, extra care must be taken to protect against nefarious uses.
According to data from IBM (NYSE: IBM), the average cost of data breaches estimated in 2021 hit $4.24 million, the highest tally on record. But because quantum computers may have the capacity to solve problems for which conventional computers may require 100 million lifetimes, it’s very possible that tomorrow’s machines could break the internet as we know it.
Indeed, it’s not out of the question for quantum computers to threaten the sanctity of the blockchain. To no surprise, then, several blue-chip organizations along with governmental institutions — think military units with a keen interest toward preserving secrets of national importance — are interested in Arqit’s quantum encryption services.
But when you’re dealing with the problems of tomorrow, plenty of things can go wrong. That’s why it’s important to maintain your composure with ARQQ stock, investing only what you can afford to lose.
How to Buy Arqit Quantum IPO (ARQQ) Stock
Before anyone commits to participating in Arqit Quantum’s debut, they should recognize the underperformance of SPAC-based business combinations. Usually, the exercising of warrants catches rookie investors off guard, potentially setting off panicked sell orders and therefore increased volatility.
That said, premerger SPACs put everyone on the same playing field. Further, as publicly traded entities, you can acquire SPAC shares at any time in their cycle. Thus, if you already know how to buy stocks, you can jump right in. If not, follow the simple steps below.
Step 1: Pick a brokerage.
Thanks to improving technologies and burgeoning interest in online brokerages, every major platform competes on similar financial incentives, such as commission-free trading. With that significant consideration standardized, you are free to narrow your list of best brokers to those offering the attributes and features that you care about the most.
Step 2: Decide how many shares you want.
There’s no way around it — IPOs are risky and SPAC-based business combinations even more so. To address this circumstance, you should elect a balanced share count that facilitates adequate rewards but also diminishes downside pain.
Step 3: Choose your order type.
Before placing your first order, familiarize yourself with these market concepts.
- Bid: The bid is the rate you sell stock to the broker.
- Ask: The ask is the broker’s price charged if you’re buying a certain stock.
- Spread: The variance between the bid price and the asking price, the spread also represents market liquidity and risk. Tighter spreads imply higher liquidity and lower risk due to plentiful participation, while broader spreads entail higher risk due to lower volume.
- Limit order: Trade requests at a predetermined price, limit orders offer rate transparency but no execution guarantees.
- Market order: On the flipside, market orders assure fulfillment but only at the prevailing rate, which typically constantly fluctuates.
- Stop-loss order: A protective measure, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only execute at a predetermined price, preventing surprises in your automated exits. However, such orders carry the same nonfulfillment risk as limit orders.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
ARQQ Restrictions for Retail Investors
It’s best to review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in market functions. Basically, you cannot unfairly advantage privileged information.
If you’re interested in building a portfolio of traditional public offerings, consider opening an account with ClickIPO. This company buys shares of select enterprises with public ambitions for the end purpose of distribution to its members.
Preventing Tomorrow’s Problems Today
Though apocalyptic movies about machines usurping humans are purely science fiction, their underlying theme — that tech can be a force for good or evil — is not. What makes Arqit Quantum’s IPO compelling is that it addresses an inevitable dilemma. Still, how that dilemma ultimately gets addressed represents the intrigue and possible pitfall of ARQQ stock.
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