IonQ dips after raising $2 billion through a creative sale of stock and warrants
IonQ is falling in early trading after announcing plans to raise nearly $2 billion from the sale of stock and warrants to Heights Capital Management, an affiliate of Susquehanna that focuses on investing in high-growth firms.
The terms of the financing may look pretty odd, at first blush.
IonQ is selling:
16.5 million shares at $93 — a 20% premium to its closing price on Thursday!
Pre-funded warrants at $93 per share that enable the buyer to accumulate another ~5 million shares within seven years.
An additional set of seven-year warrants that allow for the purchase of an additional ~43 million shares, which are exercisable at a price of $155 — double where the shares closed on Thursday!
What’s going on here: Heights Capital is paying IonQ more than its shares are worth right now in order to get cheaper optionality to the stock going up over 20% or more than doubling over the next seven years.
At the risk of stating the obvious, this is a major bet by Heights Capital — if the stock does cross the $155 threshold within the next seven years, exercising all of the (now profitable) warrants would cost ~$6.7 billion.
There’s some definite ingenuity in the financing, but thanks to OpenAI, this isn’t even the oddest arrangement we’ve seen this week.
While quantum computing is a white-hot investment theme, pure-play companies are in relatively early stages of their commercialization, and as such, require some injections of capital from time to time. Earlier this week, Quantum Computing tumbled after announcing plans to raise $750 million through a private placement of stock.
