Quantum computing specialist Rigetti Computing (RGTI +9.96%) soared sky-high at the end of 2024, but gave back a lot of those gains in the first half of 2025. On June 25, the stock is trading 48% below January's peak prices. Will Rigetti's stock get a second wind someday soon, or could the price chart continue its retreat?
Let's find out.
Image source: Getty Images.
Rigetti Computing's quantum chops
Rigetti is no spring chicken. The company was founded in 2013 and delivered its first quantum computing services in the cloud four years later. Its systems rely on superconducting materials cooled nearly to absolute zero. It's a proven approach, but also a costly one with specialized materials managed by massive super-cooling machinery.
Nobody expects quantum computers to take over every data-crunching task, even in the long run. Rigetti proposes a hybrid approach where digital computers continue to be the workhorses of everyday computing needs, but with the option to tap into quantum computers for certain workloads. So the company develops solutions across this stack of technologies, from quantum chips and systems to the old-school software that assigns quantum jobs and reads the results.
Rigetti's management sees a huge long-term market in this integrated system philosophy. Last summer, management said that "practical quantum computing is poised to happen in the next few years and have significant commercial potential."
A significant breakthrough in quantum computing error correction arrived five months later. Rigetti's stock soared from roughly $1 to more than $21 per share in five weeks, as investors saw a quick route to commercial applications.
NASDAQ: RGTI
Key Data Points
When quantum hype meets Wall Street reality
But the huge gains didn't last.
Jensen Huang, the CEO of semiconductor giant (and quantum-to-digital software developer) Nvidia (NVDA +5.93%) said that practical quantum systems could be 20 years away. Huang tried to backtrack from that statement, but the market-moving effects held firm anyway.
At this point, Wall Street seems to have settled on a compromise between Rigetti's quick plans and Nvidia's long-term view. Despite losing approximately half of its peak gains, Rigetti's stock is still up tenfold over the last year.
Counting the costs (and losses) at Rigetti
Unfortunately, Rigetti runs an expensive business model with minimal sales and deep financial losses.
The company reported $10.8 million of revenue in 2024, down from $12 million in 2023. Net losses nearly tripled in the same time span, from $75 million to $201 million. The soaring stock price played a large part in the loss calculations, as the fair value of Rigetti's stock-based financial instruments soared. That's a taxable expense. And of course, Rigetti spent $50 million on research and development plus $24 million on selling, general, and administrative expenses -- again, based on $10 million in full-year sales.
Furthermore, Rigetti isn't the only name in the quantum computing game. The game-changing error correction that sparked last year's boom? That was an achievement from Google Quantum AI, a group in the Alphabet (GOOG +2.83%) (GOOGL +2.53%) tech empire. Rigetti lists Google, IBM (IBM 1.44%), and the Chinese government as direct rivals using similar superconducting techniques. And you already know that Nvidia competes with Rigetti's digital-to-quantum control and reporting software. This small and cash-burning company faces challenges from some of the largest, richest, and most innovative companies in the world.
Rigetti investors need a strong stomach
Rigetti keeps the lights on by selling more stock, sometimes on the open market and sometimes in direct offerings to private investors. It's an effective cash-raising strategy, but Rigetti's existing investors see massive dilution along the way. The share count is up by 61.7% over the last year:
RGTI Shares Outstanding data by YCharts
Rigetti's stock returns took some damage from dilution, but the chart above still shows a 52-week return of more than 1,100%. Cry me a river, right?
That's great as long as the stock is soaring, but Rigetti's share price often shows big drops between the sudden jumps. Go back to June 2024 and look at the two-year chart at that point. You'll see a very different story:
RGTI Shares Outstanding data by YCharts
The stock sales continued while share prices dropped 76% lower. I expect Rigetti to continue raising cash on the open market, no matter where the chart is going next. Based on the company's unprofitable operations, lofty valuation, and well-heeled rivals, investors are probably looking at another lengthy downturn.
