Shares of Rigetti Computing (RGTI +1.00%) are plummeting on Tuesday. The quantum computing company's stock plunged 10% as of 12:46 p.m. ET and was down as much as 12.5% earlier in the day. The steep decline comes as the S&P 500 (^GSPC 0.29%) and Nasdaq Composite (^IXIC 0.70%) were up 0.8% and 1.6%, respectively.
The quantum computing pioneer reported mixed Q1 2025 results on Monday after the market closed.
NASDAQ: RGTI
Key Data Points
By the numbers
Rigetti posted its first-quarter results on Monday, revealing earnings per share (EPS) of $0.13. For the same period last year, the company lost $0.14 per share.
The shift to operating in the black was overshadowed, however, by the massive drop in sales. The company reported a top-line revenue decline of 51% year over year (YOY). The $1.5 million came in far below the expected $2.6 million.
The company's CEO, Subodh Kulkarni, emphasized during Rigetti's earnings call that "quantum computing continues to be in R&D mode" and that the "lumpy" revenue growth isn't a concern.
Rigetti's profitability comes with a significant asterisk, however: Its Q1 net income includes $62.1 million in "noncash gains from the change in fair value of derivative warrant and earn-out liabilities." In other words, the profitability gain has more to do with accounting than a material change in its business.
Image source: Getty Images.
Rigetti has a long way to go
Echoing Kulkarni's message, it's not surprising to see major swings in revenue and earnings with a company at this stage. That in and of itself isn't concerning.
Rigetti and other quantum companies are working to develop a breakthrough technology on the bleeding edge of science. We are likely a decade or more out from true commercial application of these technologies on the scale that would justify the investment. Though many of the CEOs of these companies may have aspirations of a shorter timeline, even they admit it's not in the next couple of years.
If you are an investor with a particularly high risk tolerance and the ability to wait a decade or more for your investment to pay off, Rigetti is one of the better quantum computing stocks on the market. However, I would strongly suggest spreading your investment among many quantum stocks. The technology's maturation is just too far off to be able to tell which company's approach will work.
