By Rigetti Computing Inc (NASDAQ: RGTI) lost another 10% this morning after reporting a loss for its fiscal Q4 that came in well above the analysts’ forecast.
Year-to-date, shares of the quantum computing company are now down close to 65%.
Still, they’re not inexpensive to own by any stretch of the imagination.
Rigetti reported a loss of 68 cents per share in its recently concluded quarter, significantly wider than analysts’ expectations of an 8-cent loss.
The disappointing results suggest that buying RGTI on today’s weakness may not be the best move.
Rigetti Computing stock is immensely overvalued
Quantum computing sure is an exciting technology with a big enough addressable market.
But does it guarantee every name within that space will outperform in the near to medium term? Perhaps not!
RGTI has a market cap of about $1.75 billion following today’s sell-off. In comparison, its revenue came in at under $11 million only for 2024.
So, Rigetti Computing stock is essentially trading at more than 160 times its trailing 12 months sales, which suggests its current valuation is detached from the fundamentals.
RGTI shares are immensely overvalued despite recent weakness. Investors are, therefore, recommended caution in considering buying the dip in this quantum computing stock.
RGTI is burning cash at an accelerated rate
Rigetti may be unattractive to own at current levels as the company continues to burn cash at an accelerated pace.
The quantum computing company now has $217 million in cash (including cash equivalents and securities) after losing a tad above $68 million in 2024.
More importantly, it’s not expected to turn a profit anytime soon, which means RGTI may dilute its shareholders further as it moves to raise fresh capital in the coming months and years.
Together, these factors suggest Rigetti Computing shares are not suitable for an investor on the lookout for solid financials and exciting growth prospects.
Should you buy the post-earnings dip in Rigetti shares?
On the plus side, the Nasdaq-listed firm teamed up with Quanta Computer in the final quarter of last year to ramp up development of quantum computing.
“Quanta collaboration is designed to strengthen our position in this flourishing market. Our complementary strengths will support us in our goal to be at the forefront of the quantum computing industry,” Subodh Kulkarni – the company’s chief executive told investors in a release today.
RGTI is committed to 100+ qubits by the end of this year while achieving a two-fold reduction in error rates.
In December, it launched Ankaa-3, its 84-qubit system, reaching a median iSWAP gate fidelity of 99%.
That said, Rigetti Computing stock may still be unattractive amidst the ongoing sell-off as its revenue is shrinking, it’s burning cash fast, and it may need new capital to sustain operations moving forward.
The post Rigetti Computing stock is down 65%: here’s why I’m not buying appeared first on Invezz
