Rigetti Computing's (RGTI 0.85%) stock attracted considerable attention from investors in late 2024, as it surged higher by almost 2,000% in the last three months of the year. Its computing power is on track to rise rapidly, and Alphabet's Willow quantum chip seems to have reinvigorated the industry.
However, in 2025, it's lost around half of its value as industry insiders expressed doubt that the technology would be ready for commercial use anytime soon.
Nonetheless, quantum computing should lead to an exponential increase in computing power. This led investors to ask whether a smaller quantum computing stock such as Rigetti can turn investors into millionaires. Let's take a closer look.
Quantum computers operate on qubits. This separates them from traditional computers, whose bits can only recognize zeroes and ones. In contrast, qubits can accommodate any value between zero and one, which dramatically increases computing power.
Despite a market cap of just over $2.3 billion, Rigetti stoked investor interest as it improves its computing capabilities. Amid such improvements, Rigetti plans to release a 36-qubit system in mid-2025. By the end of the year, it intends to release a 100-qubit system that targets 2x error reduction. This is critical, as quantum technology has come under fire for a high error rate.
Rigetti also began plans to develop the 336-qubit Lyra system, though it did not announce a timeline for its release.
Admittedly, the company may want to take its time, as it faces a possibly more daunting challenge than error reduction. For now, quantum computing is a solution without a problem, and much of the commercial interest has focused on research instead of practical applications.
That realization may have led to the pullback in Rigetti stock, as Nvidia CEO Jensen Huang predicted that no "useful" quantum computer would appear in the next 15 years, a forecast that has diminished enthusiasm for the technology.
Investors are likely also right to question Rigetti's future amid its financial performance. In 2024, its $10.8 million in revenue dropped 10% from year-ago levels.
Moreover, this low revenue level led to a $68.5 million operating loss. Rigetti also sustained $134 million in combined noncash expenses for write-downs of derivative warrant and earn-out liabilities. When coupled with other expenses, that led to a $201 million loss in 2024, well above the $75 million loss in 2023.
With that, Rigetti reported almost $62 million in negative free cash flow in 2024. Right now, the company holds $192 million in liquidity, meaning under current conditions, it can stay in business for another three years before needing additional funds.
Still, considering its heavy losses and uncertain near-term prospects, one should assume it will have to issue additional shares or take on more debt to stay in business. That may leave investors questioning how it will compete with a tech giant like Alphabet, which has no such liquidity issues.
Additionally, valuation is difficult to measure. A lack of profits leaves it without a P/E ratio, and as a low-revenue company, it sells at a price-to-sales (P/S) ratio of more than 140. Also, with its price-to-book ratio of 18, investors may feel reluctant to buy under current conditions, which would likely bode poorly for Rigetti Computing stock.
In today's tech environment, Rigetti Computing is unlikely to turn its small investors into millionaires.
Indeed, Rigetti remains a small company despite its recent stock performance. If it could find commercial success in quantum computing, its stock may rise exponentially.
Unfortunately, such commercial applications are unlikely to appear for years, leaving investors to wonder how it will increase its revenue.
Moreover, as a smaller enterprise, it continues to burn significant amounts of cash. Unless its near-term business prospects improve significantly, it will likely have to issue shares or increase its debt to stay in business. Such conditions make it unlikely the stock will earn high-enough returns to make small investors wealthy.
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