Rigetti Computing (RGTI) Stock: Market Value Hits $2.2B Despite Revenue Dip

TLDR:

Rigetti Computing (RGTI) stock has surged 595% over 52 weeks, with shares up 1,040% in the past six months, now trading at 280.68 times forward sales

The company is anticipating a potential DARPA Quantum Benchmarking contract worth $300 million over seven years, with award decisions expected in February

Q3 2024 showed mixed results with $2.4 million in revenue (23% YoY decline) but improved losses at $0.08 per share compared to $0.17 previous year

Company plans to launch new quantum systems in 2025: 36-qubit system by mid-year and 100+ qubit system by year-end, both targeting 99.5% fidelity

Five analysts maintain positive ratings, with price targets ranging from $4.00 to $15.00, averaging $10.70

Quantum computing company Rigetti Computing (RGTI) has seen its stock price surge dramatically over the past year as investors bet on its technological advances and potential government contracts.

The Berkeley, California-based company’s shares have risen 595% over the last 52 weeks, far outpacing the S&P 500’s 23% gain during the same period.

Rigetti Computing, Inc. (RGTI)

The company’s stock performance has been particularly strong in recent months, climbing 1,040% over the past six months. This surge comes as Rigetti positions itself for a potential Defense Advanced Research Projects Agency (DARPA) Quantum Benchmarking contract, expected to be awarded in February.

The DARPA contract, valued at approximately $300 million over seven years, could provide substantial funding for Rigetti’s development of high-fidelity, error-corrected qubit systems. Industry analysts suggest Rigetti is well-positioned to secure this government contract, citing the company’s recent advances in quantum computing technology.

Rigetti’s third-quarter 2024 financial results presented a mixed picture. The company reported revenue of $2.4 million, representing a 23% decrease from the same period last year and falling short of Wall Street’s expected $3.4 million. Operating expenses reached $18.6 million, resulting in a net loss of $14.8 million.

However, the company showed improvement in its per-share losses, reporting a loss of $0.08 per share compared to $0.17 in the previous year. As of September 30, 2024, Rigetti maintained a solid financial position with $92.6 million in cash, cash equivalents, and securities.

Quantum Computing

Looking ahead to 2025, Rigetti has outlined plans to introduce new quantum computing systems. The company expects to launch a 36-qubit system by mid-year, followed by a system containing over 100 qubits by year-end. Both systems are designed to achieve 99.5% median 2-qubit fidelity.

The stock currently trades at 280.68 times forward sales, substantially above the sector median of 3.27x, reflecting high investor expectations for future growth. Analysts project the company’s losses to narrow by 35.9% year-over-year in fiscal 2024, with an additional 17.8% improvement expected in fiscal 2025.

Wall Street analysts maintain an optimistic outlook on Rigetti’s prospects. Among five analysts covering the stock, four rate it as a “Strong Buy” while one recommends a “Moderate Buy.” Price targets range from $4.00 to $15.00, with an average of $10.70.

Alliance Global analyst Brian Kinstlinger recently raised his price target from $5.50 to $15.00, citing Rigetti’s improved fidelity rates, tiling innovations, and previous success in securing Department of Defense research contracts.

Benchmark analyst David Williams increased his price target to $14.00 from $2.50, while B. Riley Securities analyst Craig Ellis raised his target to $15.00 from $8.50. Craig-Hallum analyst Richard Shannon initiated coverage with a $12.00 price target.

The company’s market capitalization currently stands at approximately $2.2 billion. Rigetti’s quantum-classical infrastructure integrates with both public and private clouds, aiming to advance practical quantum computing applications.