Honeywell just solved a problem that shouldn't exist. Investors couldn't figure out what the quantum computing division was worth when it was buried inside a conglomerate that makes thermostats. The solution? Make it public so retail traders can be wrong about it in real time instead of behind closed doors.
The company is calling this a win because "the offering gives a valuation to a business that investors previously had to guess what it was worth." Read that sentence again. They're celebrating the fact that nobody knew what they owned. That's like a homeowner bragging that he finally looked in his attic and found out whether it contained gold bars or raccoons. Turns out it was quantum computers, which might be both.
Quantum computing operates on principles so confusing that physicists argue about them at conferences. Now Honeywell wants day traders who think options are free money to assign a fair market value to entangled qubits. These are the same people who bought GameStop at $400 because someone on Reddit said hedge funds were scared. They're about to price technology that exists in a superposition of states until observed. Perfect match.
The IPO prospectus will explain how quantum computers work differently than classical computers by leveraging quantum mechanical phenomena to solve complex problems exponentially faster. Retail investors will read none of this. They'll see "quantum" and think it sounds expensive. They'll see "Honeywell" and remember their parents had a thermostat. Then they'll buy twelve shares on margin.
Honeywell previously had to guess what this division was worth. That's management-speak for "we had no idea and neither did analysts, but everyone nodded seriously in earnings calls when we mentioned quantum initiatives." The quantum business was worth whatever Honeywell said it was worth, which is to say it was worth nothing specific until institutional investors needed to justify their positions with actual numbers.
The stock will trade based on sentiment about quantum computing's future, which nobody understands, applied to a specific company's execution, which nobody can evaluate. At least when it was private, only Honeywell executives had to pretend they knew what they were doing.
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