In This Article:
Key Points
-
Rigetti's sales are declining.
-
Its stock is very expensive by nearly any measure.
-
Investors have been speculating in quantum computing with this stock, and that's likely a mistake.
Quantum computing is getting a lot of attention from investors right now as some look for the next big thing in the tech space. The result has been some high-flying quantum computing stocks, with Rigetti Computing (NASDAQ: RGTI) rising 823% over the past year.
But Rigetti's stock is taking a breather right now and is down 23% since the beginning of the year. That pullback may make buying Rigetti stock an alluring idea to some investors.
Here are three reasons why you should resist the temptation.
1. Quantum computing is still a mostly unproven market
Rigetti makes quantum computing hardware, software, and quantum computing cloud systems that it sells to customers, and some of them are big tech players like Microsoft and Amazon. The company is tapping into a quantum computing hardware and software market that could be worth up to $170 billion by 2040, according to Boston Consulting Group.
But while Rigetti's customers and sales are more than theoretical, the mass adoption of quantum computing is still speculative. There aren't many practical applications for quantum computing at the moment, and most companies are still trying to figure out how to reduce the amount of errors their systems produce.
Does quantum computing hold lots of promise to surpass existing computing capabilities? Absolutely. But is Rigetti or any of its peers on the cusp of truly revolutionizing how companies and consumers process information? Most likely not. This makes any investment in the company right now a fairly speculative move.
2. Rigetti's sales are slipping
One thing that start-ups in a new market should be able to do is increase sales. But Rigetti's revenue has been on a downward trajectory. The company has sales of just $1.5 million in its recently reported first quarter, down nearly 52% from the year-ago quarter.
This wasn't just one bad quarter of sales, either. The company's full-year 2024 revenue was $10.8 million, down 10% from the previous year.
Rigetti's management said on the first-quarter earnings call that significant commercial sales won't occur until about three to five years from now. Meanwhile, the company's operating loss widened to nearly $22 million in the quarter.
It's worth noting, though, that the company has $237.7 million in cash and cash equivalents. So it's likely Rigetti has enough money to continue its operations for a while. But it also means that if you buy shares of Rigetti now, you shouldn't expect significant revenue from the company for a long time.
