Rigetti Computing, Inc. (RGTI) has become one of the most hotly discussed stocks on Wall Street, experiencing staggering gains this year, particularly following developments in the quantum computing sector. Over the past month alone, Rigetti's shares skyrocketed by 460%, contrasting sharply with the S&P 500 composite's decline of 0.4% during the same period. This remarkable ascent has prompted investors and analysts alike to speculate about the stock's future.
The surge was largely fueled by the recent breakthrough announced by Alphabet, Google’s parent company, which unveiled advancements in quantum chip technology, significantly elevatorying investor interest across smaller firms within the sector. Rigetti, for its part, saw its stock appreciated by 128.65% within just one week, making its total gains for 2024 climb to an astonishing 1,634%. The excitement spurred sub sectors like Quantum Computing stocks, which also enjoyed substantial upticks; Quantum Computing Inc. soared 50-fold from its 52-week low, with D-Wave Quantum experiencing similar gains.
Despite the market frenzy, Rigetti's underlying financial performance remains modest at best. The company reported revenues of only $2.4 million for the last quarter, juxtaposed against hefty operating losses amounting to $17.3 million. This financial reality begs the question: can the firm sustain its impressive share price as it faces such substantial losses? With cash and equivalents dwindling from $206.6 million as of March 2022 to just $20.3 million, the company appears to be against the ropes financially.
Potential investors are advised to tread carefully; the risk of a market correction looms large. Bearish sentiments are gaining traction, particularly among short sellers who currently hold 16.87% of the stock on short floats. These investors are taking considerable risk, betting against Rigetti’s ascension. They may find themselves under pressure, especially if the stock maintains its course due to fear of missing out (FOMO) among retail investors.
Grounded within the company’s goals is the ambition to deliver a full-stack quantum computing system. Rigetti has outlined plans to launch its 84-qubit Ankaa-3 system by the first quarter of 2025, and it aims to introduce systems surpassing 100 qubits by year’s end. Innovations are underway, including the implementation of cutting-edge AI technologies to advance the calibration of quantum chips, which could potentially improve qubit performance significantly.
Additionally, Rigetti has formed strategic partnerships to bolster its technological capabilities. Collaborations with Quantum Machines aim to improve quantum computer calibration through automation, resulting in high accuracy during qubit setup processes. This positions Rigetti for success, but as the company forges its path, the reality remains: time is needed to bring absolute commercial viability to market.
Interestingly, as Rigetti’s stock continues soaring, it trades on the high end of its 52-week price range, showing significant momentum. Yet, speculation abounds, particularly concerning its price-to-sales (P/S) ratio, currently noted at 234x—vastly above the sector average of 3.28x. Analysts maintain their bullishness, with Craig-Hallum's Richard Shannon assigning the stock with a Buy rating and setting a target price of $12, citing Rigetti's unique advantages.
Nevertheless, analysts warn of potential pullbacks, with the average price target for Rigetti stocks forecasting declines of nearly 70% over the upcoming 12 months. Investors pondering whether Rigetti can maintain momentum must also assess the financial fundamentals and the looming question about the company’s ability to produce viable quantum products at commercial scale.
Rigetti’s impressive stock performance reflects broader optimism within the quantum computing space, yet the reality of its financial situation acts as a cautionary tale. For those investing at such elevated price levels, patience will be pivotal as Rigetti embarks on its ambitious mission to redefine quantum computing.