Rigetti Computing: An Ongoing Volatile Journey
Rigetti Computing (RGTI), a company focused on quantum computing, has experienced significant fluctuations in its stock value over the past three years. The company, which entered the public market through a merger with a special purpose acquisition company (SPAC) on March 2, 2022, began trading at $9.75 per share. However, it saw its stock drop to a record low of $0.38 per share by May 3, 2023. As of April 2, 2025, Rigetti’s stock has rebounded to approximately $8.50 per share, meaning a $1,000 investment at its lowest point would now be worth nearly $22,400. The reasons behind Rigetti’s stock decline and subsequent recovery are complex, prompting an examination of whether it presents a worthwhile investment after its recent resurgence.
Quantum Computing: Challenges and Opportunities
Traditional computing systems process data using binary bits represented as zeros and ones. In contrast, quantum computers utilize "qubits," capable of storing fractional values between zeros and ones. This allows quantum computers to process vast amounts of data at unprecedented speeds. Despite this potential, quantum computers are currently larger, more expensive, and energy-intensive compared to high-end binary computers. They also generate a higher frequency of data errors, making error correction a crucial aspect of developing practical quantum computers. Consequently, quantum computing remains largely focused on niche research applications.
Emerging companies, including Rigetti Computing, are striving to overcome these challenges by creating more efficient and accurate quantum systems. Rigetti designs and manufactures quantum processing units (QPUs), constructs comprehensive quantum computing systems, and operates a cloud platform for quantum application development. This diverse array of products and services positions Rigetti as a "full stack" provider in the evolving quantum computing market.
Understanding the Volatility
Prior to going public, Rigetti projected its revenue would reach $18 million in 2022, $34 million in 2023, and $73 million by 2024. The company also predicted its adjusted EBITDA would improve from a $39 million loss in 2022 to a more modest $12 million loss by 2024. Contrary to these forecasts, Rigetti reported only $11 million in revenue for 2024, alongside an adjusted EBITDA loss of $49 million. On a GAAP basis, the company’s net loss amounted to a staggering $201 million. Factors contributing to the stock’s decline included this disappointing financial performance, rising interest rates, and the resignation of its founder, Dr. Chad Rigetti, as CEO in late 2022.
Future Projections and Challenges
Despite these hurdles, Rigetti’s stock price rallied in the latter half of 2024 following the release of new products and amid decreasing interest rates. Dr. Rigetti remained in the company to concentrate on product development after appointing Dr. Subodh Kulkarni, formerly of CyberOptics, as CEO. Rigetti introduced the Novera QPU, a 9-qubit commercial quantum computer priced at $900,000, and launched its first 84-qubit Ankaa-3 system, designed to achieve over 99% error detection ("median gate fidelity"). The company’s client base now includes notable institutions such as the Superconducting Quantum Materials and Systems Center, the Air Force Research Lab, and Horizon Quantum Computing in Singapore.
Looking ahead, Rigetti plans to introduce a modular quantum computing system this year, linking four 9-qubit chips to create a 36-qubit system with a median gate fidelity of 99.5%. By 2026, the company aims to deploy a 100-qubit nonmodular system with similar fidelity, along with a more advanced 336-qubit system in subsequent years.
Assessing the Current Stock Valuation
If Rigetti successfully scales its operations as anticipated, analysts predict its revenue will grow by 27% to $14 million in 2025, 140% to $34 million in 2026, and 48% to $50 million in 2027. Despite this potential growth, Rigetti’s market cap of $2.23 billion results in its stock trading at 45 times its projected 2027 sales. Comparatively, IonQ, an industry competitor expected to experience faster growth, trades at just 19 times its expected 2027 sales.
As a result, Rigetti’s stock is currently priced for near-perfect execution, which could prove challenging in an uncertain macroeconomic environment. Additionally, the company may face intensified competition from tech giants like Microsoft, Google, and IBM, which are also investing heavily in quantum computing advancements. Furthermore, Rigetti has increased its outstanding shares by 151% since going public through secondary offerings and stock-based compensation, with further dilution likely as the company seeks to finance its ongoing losses. Insiders have also been net sellers, offloading nearly four times more shares than purchased over the past year.
Given these considerations, investor caution is advised, as Rigetti’s stock valuation remains high relative to its current financial position and growth prospects.
