Is D-Wave's Latest $400M Sales Agreement a Dilution Deal-Breaker?

Key Points

• D-Wave Quantum announced a $400-million equity offering in June, and shares fell by almost 20% in a five-day trading period.
• The offering comes as D-Wave shares were down slightly from all-time highs, a time at which an ATM offering would be minimally dilutive.
• Still, cautious investors may see this move as D-Wave's effort to delay reckoning with its lackluster revenue performance.

After nearly touching $19 per share twice, in late May and again in early June 2025, D-Wave Quantum Inc. NYSE: QBTS seems to have lost momentum heading to the midpoint of the year. Shares are down about 20% in the five days leading up to June 13. Many investors may be likely to attribute the reversal to a recognition across the market that D-Wave's stock trades at an exceptional premium.

However, others could point to another risk that investors may be shying away from: dilution.

D-Wave made headlines earlier in the spring when it announced commercial availability of its Advantage2 system, which could bring unprecedented levels of computing power to retail customers. But when the company announced a major at-the-market (ATM) offering in early June, the second of its kind this year, in addition to a separate offering of up to 5 million QBTS shares by shareholder Lincoln Park Capital, alarm bells rang for some investors. Is dilution something QBTS investors should be concerned about?

Potential for $400 Million Offering

D-Wave's latest ATM offering allows for the issuance or sale of up to $400 million in shares of common stock. Because the announcement included the provision that D-Wave could issue new shares, this development could be dilutive for investors. 

Dilution in this way can be bad for existing shareholders because it means they suddenly own a smaller percentage of the company, which may also lead to reduced voting rights. From a performance perspective, dilution by increasing the number of available shares can also skew figures such as earnings per share (EPS).

As mentioned, this latest announcement is D-Wave's second ATM offering this year. The first, for $150 million in stock, was completed in January. For investors skeptical about the ATM strategy, it may appear that D-Wave relies heavily on these equity offerings to fund operations, as its revenue generation capabilities are minimal.

Given that the company's revenue so far has been largely dependent upon a small number of individual system sales to a very niche set of clients, it might seem that D-Wave lacks a clear path to achieving sustainable profitability on the same scale as these equity sales.

Might Another ATM Offering Not Be Bad?

On the other hand, more optimistic investors might view this most recent ATM offering announcement as D-Wave's attempt to capitalize on a share price that is just shy of all-time highs. Raising money by issuing new shares can be minimally dilutive when the stock price is high, because it means fewer new shares are needed to achieve a particular dollar goal.

Further, D-Wave has recently reiterated that it has sufficient cash on hand to sustain the company until it achieves consistent profitability. Another ATM offering at this stage capitalizes on the significant investor enthusiasm for the company and allows it to build up its funds toward general corporate use.

Besides that, the race to develop quantum technology is accelerating, with a number of upstart quantum stocks vying for position against legacy tech giants. A company like D-Wave, despite the hype, can use all the funding it can get at this stage to solidify its position within the industry.

Bullish or Bearish View of D-Wave?

Ultimately, an investor's view of whether the latest ATM offering announcement poses a dilutive dilemma for D-Wave may come down to how bullish or bearish that investor feels about the firm.

After all, though shares are currently close to an all-time high, one might expect D-Wave to wait to issue more shares until the share price reaches new heights if the company expects the stock to continue moving upward. With this in mind, a major $400 million equity offering could signal that D-Wave thinks the share price has peaked for now.

For those cautiously optimistic about D-Wave's short-term potential but interested in hedging a bet on the quantum name, diversification, as represented by a quantum tech ETF or a similarly focused fund, is always a draw.