Is Rigetti Computing (RGTI) the Next Big Tech Winner?
|
|
Quantum computing stocks have exploded since December. Rigetti Computing (RGTI) surged 1,373%, D-Wave (QBTS) jumped 835%, and Quantum Computing (QUBT) rocketed 1,442%. The rally caught many off guard. Yet financial pros have kept a close eye on the sector, particularly Rigetti, according to our TrackStar data, which showed significantly higher search volume than competitors. With quantum computing expected to revolutionize everything from drug discovery to cybersecurity, investors want to know if this rally has legs. Rigetti’s Business Rigetti Computing builds quantum computers and the superconducting quantum processors that power them. Their approach mirrors that of larger competitors like IBM (IBM) and Google (GOOGL). The company operates Fab-1, a dedicated quantum chip manufacturing facility, setting it apart from competitors through vertical integration. Their business model focuses on quantum processing unit (QPU) sales and Quantum Computing as a Service (QCaaS). Rigetti segments its business into the following areas:
Recent quarterly results showed signs of progress with the launch of their 84-qubit Ankaa-2 system achieving 98% median 2-qubit fidelity, representing a 2.5x performance improvement over previous generations. The company plans to release a 36-qubit system by mid-2025 using four 9-qubit chips with targeted 99.5% median 2-qubit fidelity, followed by a 100+ qubit system by year-end. |
Continued…
|
|
Rigetti’s focus on superconducting qubits offers advantages in speed and manufacturing scalability compared to competing technologies. Management expects quantum computing demand to accelerate as artificial intelligence and cloud computing drive massive increases in computational needs. Financials
Source: Stock Analysis Revenue declined 19% year-over-year to $11.9 million, though forward guidance suggests 5.9% growth ahead. Despite the revenue drop, gross margins improved to 60.6% from 76.7% a year ago as the company streamlined operations. Operating losses narrowed to $67.2 million from $72.3 million as research and development costs declined following workforce reductions. The company holds $92.6 million in cash and marketable securities against $13.3 million in debt, providing runway into early 2026. Free cash flow remains negative at $65.9 million but showed sequential improvement from the previous quarters. Valuation
Source: Seeking Alpha Traditional metrics like P/E ratios don’t apply given Rigetti’s pre-profit stage. The company trades at 29.7x book value compared to IonQ’s (IONQ) 23.7x, reflecting investor optimism about Rigetti’s vertically integrated approach. On an EV/Sales basis, Rigetti commands a premium at 477.6x versus peers ranging from 86.8x to 266.6x. Growth
Source: Seeking Alpha While current year-over-year revenue declined 19.1%, forward estimates project 5.9% growth. This trails quantum computing peers significantly, with IonQ expecting 95.7% growth and Quantum Computing projecting 122.8%. However, Rigetti’s technological advantages in speed and manufacturing could accelerate growth as the market matures. Profitability
Source: Seeking Alpha Rigetti’s gross margins lead the peer group at 60.6%, ahead of D-Wave’s 64.3% and IonQ’s 50.3%. However, high R&D spending results in significant operating losses, with margins of -565.3% compared to peer averages around -450%. Return on equity of -51.5% and return on assets of -41.9% reflect the early stage nature of the business. Our Opinion 1/10 Rigetti’s vertical integration and technological progress make it an intriguing player in quantum computing. However, the recent stock surge appears to price in much of the potential upside while downplaying execution risks and cash burn. Additionally, Rigetti’s technology suffers from the same error rates and constraints as larger, more well-capitalized players. Right now, there’s no reason to believe Rigetti will develop commercially viable quantum computers before others. |
|
Proprietary Data Insights Financial Pros’ Top Quantum Computing Stock Searches in the Last Month
|
||||||||||||||||||||||||||||
|
News & Insights |
Just Spilled
|
|
Want to get content like this directly to your inbox? |