D-Wave Quantum, ARI Motors, Bayer – Which stocks should be in the portfolio for 2025?

D-Wave Quantum – Holds numerous patents

With Google's Willow quantum chip, second-tier companies working on quantum computing have come into focus. Their stocks have skyrocketed, including that of D-Wave Quantum. The Company boasts the third-largest quantum patent portfolio in the world and thus clearly stands out from the competition. The business model is based on a "Quantum Computing-as-a-Service" platform and is intended for commercial use. This service is becoming increasingly popular, and revenues have recently risen accordingly. However, as of 2024, total revenues have yet to exceed USD 10 million.

From a financial point of view, D-Wave Quantum is in a tight spot. The ratio of long-term debt to capital is over 103%, and its credit rating is not that great either. Added to this is the high cash burn rate. Revenues are not even reaching USD 10 million a year, but losses in the last quarter alone were a whopping USD 57 million. Cash on hand at the end of the third quarter was USD 29 million. Accordingly, the Company took advantage of the bull market and raised USD 75 million in December. A significant improvement in operating costs, in particular, is expected in the coming months.

The market for quantum computing currently offers tremendous opportunities, and D-Wave Quantum could benefit from them in the long term, provided it does not run out of money first. If we compare some key figures with those of the peer group, the value of the share is below that of its competitors. This is likely due to the tense financial situation. Nevertheless, D-Wave could have a future due to its technical innovations, patent base, and growing user base. Nevertheless, investors should act with caution here. The share is currently trading at USD 8.40.

ARI Motors – Successful in a niche market

In the long term, there is no stopping electric mobility. Advances in battery technology will have a positive impact on costs, range and charging times. In addition, solid-state batteries will be safer than the current generation of batteries. Furthermore, the charging infrastructure is being expanded, which will further increase the vehicles' suitability for everyday use. If the forecasts that battery costs will fall by around 40% are accurate, this should also reduce the prices of electric vehicles. ARI Motors already offers affordable electric vehicles and has established itself in the niche market for light commercial vehicles. The Company caters specifically to the wishes of its customers and now has over 50 variants in its program.

In the future, however, the Company also wants to appeal to private motorists and has developed an affordable, environmentally friendly electric vehicle for urban areas for this purpose. The ARI Bruni is available from EUR 15,990, has a top speed of 90 km/h, offers space for 4 people and that at a size of 3.07 m long and 1.49 m wide. With the rear seat folded down, the city runabout has a boot volume of 1,180 litres. This makes it particularly suitable for city driving, and it can fit into the smallest of parking spaces. The range is 215 km, and the vehicle can be fully charged in 4-5 hours. The quick-charge function can charge the vehicle from 30% to 80% in 35 minutes. For the city, it is a real alternative to conventional vehicles.

In 2024, managing director Thomas Kuwatsch stated that more than 250 vehicles will be delivered, corresponding to a turnover of around EUR 6 million. At the beginning of December, 264 vehicles had been pre-ordered. All this is achieved through an online shop and word-of-mouth advertising. Now, 12 commercial vehicle dealers and 6 dealers in the standard passenger vehicle sector also offer the vehicles. If the forecasts are correct and the market for electric vehicles continues to grow in 2025, ARI Motors will get a slice of the pie with its affordable, environmentally friendly vehicles suitable for everyday use. After reaching a high of EUR 0.57, the share price fell and has now repeatedly tested the EUR 0.36 mark. An interesting hammer candlestick was observed on December 30. The closing price in Frankfurt was EUR 0.38.

Bayer – The situation is clear

Last year was a challenging one for Bayer shareholders. The Company is struggling with a multitude of problems. The agriculture business suffered from low demand. In addition, lower fertiliser prices weighed further on the figures. In the third quarter, the Leverkusen-based company had to make write-offs, which contributed significantly to the net loss of around EUR 4.2 billion. The debt of around EUR 35 billion, which is mainly due to the Monsanto acquisition, also left little room for manoeuvre. This acquisition has also given rise to the ongoing legal disputes surrounding glyphosate.

To counter these problems, management has begun to take countermeasures to stabilise the situation. In the pharmaceuticals business, there are positive developments with Nubeqa™ and Kerendia™, so the expired patents of blockbusters such as Xarelto™ and Eylea™ are not quite as significant. However, they are not yet able to fully compensate for the sales. A savings program is expected to help save EUR 2 billion annually from 2026. The Company hopes to become more efficient by streamlining its organisation. The dividend has also been reduced to a minimum in order to push ahead with debt reduction. There have also been rumors of a capital increase of EUR 5 billion, but this has not yet been confirmed.

CEO Bill Anderson expressed satisfaction with the progress made so far. By the end of 2024, 80 to 90% of the teams are to be working according to the new organizational model, a target originally planned for fall 2025. It now remains to be seen whether the focus on growth markets and innovations will bear fruit. In addition, it would be desirable for the Company to settle the legal disputes in the US, which would provide greater planning security. If debt reduction also progresses, the Company will regain more financial flexibility. Most analysts recommend holding the stock with price targets between EUR 22 and 30. Currently, the share is trading at EUR 19.31, and a double bottom has been formed at EUR 18.57.

D-Wave Quantum is well positioned with its strong patent portfolio and "Quantum Computing-as-a-Service" platform, but is on shaky ground due to high losses and financial problems. ARI Motors has secured a niche market with affordable, environmentally friendly electric vehicles and plans to continue to make inroads with private customers. Bayer is working on a turnaround despite high debts and legal disputes and has introduced austerity measures to gain room to manoeuvre.