The Arqit (NASDAQ: ARQQ) stock price has collapsed sharply after the Wall Street Journal published a critical article about the company. The shares are trading at $9.34, which is the lowest they have been since September last year. They have plummeted by more than 77% from their all-time high, bringing its total market cap to about $1.5 billion.
Why Arquit Quantum is struggling
Arquit Quantum is a UK-based technology company that provides encryption services to large companies and governments. It solves the challenges that emerge when companies use Public Key Infrastructure. Its main product is known as QuantumCloud, which is a tool that helps firms secure their data.
The firm went public in 2021 by merging with a Special Purpose Acquisition Company (SPAC). After going public, the Arquit Quantum stock price surged to an all-time high of $41. At the time, the firm was valued at over $3 billion.
The stock then started falling in December as investors started to worry about the rising inflation and the Federal Reserve. Most of them started to damp high-growth unprofitable companies like Arqit.
The situation then worsened after the WSJ published an article that clamed that the firm exagerrated its claims. The paper quoted former employees and leaked internal documents. The report said that the company’s flagship product hinges on a system that might never apply beyond niche uses.
At the same time, British cybersecurity officials have warned about the role of the company’s approach to encryption. In all this, Arqit’s management has denied the allegations even as its chief revenue officer resigned last year. He accused the firm’s management of overstating contracts and giving unrealistic revenue projections to potential investors.
Therefore, the Arquit stock price has declined as investors draw parallels on the Wall Street Journal’s reporting on Theranos. The paper was the first one to warn about the company and Elizabeth Holmes.
Arqit Quantum stock price forecast
The four-hour chart shows that the ARQQ stock price has been in a strong bearish trend in the past few months. This sell-off continued this week after the Wall Street Journal allegations. It has moved below the 25-day and 50-day moving averages. It has also collapsed below the important support level at $12.55.
Therefore, the stock will likely keep falling as most investors start worrying about its business. If this happens, the next key support to watch will be at $8.
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