Rigetti Computing Inc. (NASDAQ: RGTI) lost as much as 12% on Tuesday after reporting its financial results for the first quarter, which disappointed across the board.
In Q1, the quantum technology company brought in $1.5 million in revenue, which translates to a more than 50% decline on a year-over-year basis and a 35% decline sequentially.
Analysts had called for a much higher $2.6 million in revenue for RGTI’s recently concluded quarter.
Including today’s loss, Rigetti Computing stock is down nearly 50% versus the start of 2025.
Rigetti Computing’s Q1 EPS doesn’t reflect core strength
Proponents of RGTI are cheering 13 cents a share of profit (adjusted) that the Nasdaq-listed firm reported for its fiscal Q1 on Tuesday.
However, its first-quarter EPS is not as impressive beneath the surface.
That’s because the strength in Rigetti’s per-share earnings in its recently concluded quarter was related primarily to one-time benefits.
The company’s Q1 net income included “$62.1 million of noncash gains from the change in fair value of derivative warrants and earn-out liabilities.”
Additionally, Quanta Computer – a Taiwanese computer technology and electronics hardware firm loaded up on $35 million worth of RGTI shares, according to today’s earnings release.
Put together, this suggests that Rigetti Computing’s headline profit figure in the first quarter isn’t necessarily reflective of the company’s actual operational strength.
Despite today’s loss, Rigetti Computing stock is up more than 40% versus its low in early April.
RGTI valuation remains a major concern in 2025
Investors considering buying the post-earnings dip in RGTI shares should also note that they’re going for an alarmingly high forward price-to-sales ratio of nearly 150 at writing.
Rigetti’s multiple is meaningfully higher than its peers and is a huge red flag, given that the company is seeing its revenue decline and is far from reaching sustainable profitability.
Plus, the company based out of Berkeley, California, is “four to five years away from what we call quantum advantage,” its chief executive, Subodh Kulkarni, told investors in a press release on Tuesday.
This further suggests that the quantum stock remains a high-risk investment for 2025.
Should you buy the post-earnings dip in Rigetti Computing
Caution is warranted in buying Rigetti Computing stock on the post-earnings weakness because it faces intense competition in the quantum technology space as well.
And the rivalry isn’t restricted to pure-plays like D-Wave Quantum, which, unlike RGTI, posted a strong quarter last week – giants like Google and IBM are also investing rather aggressively in quantum computing.
This bodes poorly for Rigetti investors since the titans have much more cash available to advance more rapidly in the quantum space than RGTI, potentially stealing any competitive edge that it may have at present.
That said, Wall Street had a consensus “buy” rating on Rigetti Computing heading into Tuesday.
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