Perhaps The Only German Industry Booming Right Now

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Hello and happy Sunday! It’s time to break down the biggest stories shaping markets, technology, and business:

• D-Wave Quantum Skyrockets: A surge in quantum computing optimism sends D-Wave’s stock soaring nearly 50%.

• Germany’s Defense Boom Overtakes Automakers: Rheinmetall surpasses Volkswagen in market value as defense spending reshapes Europe’s industrial landscape.

• Deliveroo’s First Profit—With a Catch: The food delivery giant posts a net profit, but operational losses remain a concern.

• Healthcare Stocks Dominate While Tesla Plummets: CVS Health leads the S&P 500, while Tesla struggles as the year’s worst-performing stock.

• Tesla's Valuation Still Sky-High: Despite its sharp decline, the EV giant remains one of the most expensive stocks in the market.

D-Wave Quantum Skyrockets as Sales Outlook Hits Record High

D-Wave Quantum’s stock surged nearly 50% after its Q4 results showed a sharp increase in future revenue expectations 🚀 🤑, with bookings hitting $18.3 million—more than its total revenue over the past two years. This rally also lifted other quantum computing stocks, including IonQ, Rigetti Computing, and Quantum Computing Inc.

CEO Alan Baratz highlighted D-Wave’s focus on real-world applications, distinguishing its quantum annealing approach from traditional gate-based quantum computing. The company recently demonstrated quantum computational supremacy on a practical problem, reinforcing its commercial potential.

The quantum sector had slumped after Nvidia’s CEO suggested the technology was still decades away from being “very useful.” However, D-Wave’s strong bookings and recent breakthroughs have revived optimism. Nvidia’s upcoming "Quantum Day" is expected to bring further attention to the industry.

From Cars to Combat: Rheinmetall Surpasses Volkswagen in Market Value

Germany’s stock market is witnessing a major shift as defense contractor Rheinmetall overtakes Volkswagen in market value, placing it among the top 10 stocks in the country’s DAX Index. 👀 While Volkswagen struggles against growing competition from Chinese EV makers, Rheinmetall is thriving amid Germany’s push for increased defense spending.

Adding to the irony, Rheinmetall is considering acquiring Volkswagen’s Osnabrück factory—potentially converting it into a tank production facility. This aligns with a broader European trend of repositioning defense investments as a means of reindustrialization, particularly in countries hit hardest by the decline of the auto sector. With U.S. tariffs on European cars looming, the shift from car manufacturing to defense production may become even more pronounced.

Deliveroo Finally Delivers a Profit—But There’s a Catch

After 12 years in business, Deliveroo has posted its first-ever net profit of £2.9 million for 2024, a major turnaround from its £32 million loss the previous year. Revenue edged up 2% to £2.07 billion, and for the first time, the company generated positive free cash flow. However, this milestone is somewhat misleading 🤡 —Deliveroo’s profit was largely due to £28.5 million in finance income, while its core operations still ran at a £12 million loss.

The company has struggled for years, burning cash to fend off competitors while retreating from unprofitable markets like Germany, Spain, Australia, and Hong Kong. Now, it's doubling down on its UK and Ireland markets, where it generates 61% of its revenue. But Deliveroo still faces intense competition from Just Eat, now backed by a strong parent company, and Uber Eats, which reported a 55% jump in UK revenue last year.

Despite a 7% rise in its stock over the past year, shares are tumbling again as investors weigh the sustainability of Deliveroo’s profit streak.

Healthcare Stocks Dominate, While Tesla Struggles

CVS Health has emerged as the best-performing stock in the S&P 500 this year, surging 46% after a strong fourth-quarter earnings report. The healthcare sector is leading the market, with companies like Gilead Sciences, Baxter, and AbbVie also posting double-digit gains. 💊 💸 Meanwhile, Tesla has taken the opposite path, now officially the worst-performing stock in the index. The EV giant has dropped 43% in 2025, weighed down by declining international sales and bearish Wall Street sentiment. Despite a slight rebound, Tesla is now trading below pre-election levels, struggling to regain investor confidence.

Tesla’s Valuation Is Still Sky-High Despite Its Massive Decline

Even after losing nearly half its value since December, Tesla remains one of the most expensive stocks in the S&P 500. The stock is currently trading at about 82 times its expected earnings over the next 12 months—down from 130x in December—but still far above both tech and auto sector averages. While some investors see the dip as a buying opportunity, Tesla’s valuation remains significantly higher than its industry peers, raising questions about how much further it could fall. 🤔