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Rigetti’s Quantum Leap: Are Investors Ready for a Rally?

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Written by Timothy Sykes Reviewed by Jack Kellog Fact-checked by Ellis Hobb
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Recent breakthroughs in quantum computing and a strategic partnership with top tech players are likely fueling Rigetti Computing Inc.’s remarkable market optimism. On Thursday, Rigetti Computing Inc.’s stocks have been trading up by 10.37 percent.

In this section, we explore key driving forces behind RGTI’s recent market activity, unveiling critical developments in quantum computing and investor reactions.

Candlestick Chart

Live Update At 11:37:09 EST: On Thursday, November 21, 2024 Rigetti Computing Inc. stock [NASDAQ: RGTI] is trending up by 10.37%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Rigetti has reached a new milestone in quantum computing with real-time, low-latency error correction on their 84-qubit Ankaa-2 system. This achievement may bolster investor confidence and propel stock growth (Nov 12, 2024).

  • A Q3 earnings report from Rigetti demonstrated a smaller-than-anticipated loss per share, driving positive sentiment despite revenue falling short of expectations. Advances in quantum chips emphasized by their CEO signal promising future growth (Nov 12, 2024).

  • A recent analysis by B. Riley raised Rigetti’s target price to $3.50, maintaining a Buy rating. The analyst forecasts substantial sales growth by mid-2025, buoyed by strong technology development and customer engagement (Nov 13, 2024).

Rigetti Computing Inc.: Financial Insights and Market Implications

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Rigetti’s journey this quarter showcases significant strides amidst hurdles, particularly in earnings and their ambitious quantum roadmap. Their Q3 revenue stood at $2.4M, shy of the $3.33M consensus, but the EPS nearly met expectations. This nuance in performance indicates efforts to tighten financial operations amid technical advancements, as highlighted in the solutions for the backlog issue their quantum system faced.

Analyzing the market’s behavior surrounding RGTI, one notices fluctuations that echo investor apprehensions tied to Rigetti’s revenue dips. Yet, their earnings bring forth a dichotomy—while losses persist, their quantum technology’s robustness suggests potential profit-making avenues. The 2024 price chart reflects this with instances of volatile trading, peaking at $1.89 before retreating to the comfort of $1.49, demonstrating traders’ conflicting interpretations of Rigetti’s strategic maneuvers and market signals.

Rigetti’s operational strategy, eyeing a high-qubit system on the horizon, portends ambitious yet feasible future prospects. These developments were underpinned by positive shifts in financial guidance, as endorsed by stakeholders like Craig Ellis, who advocate for Rigetti’s investor appeal owing to the promising quantum breakthroughs.

Key Ratios and Their Narrative

Financial ratios and fiscal health indicators shed more light on Rigetti’s narrative. Their current ratio at 4.8 suggests a robust liquidity position, although profitability margins tell a challenging tale with pretax profits swinging to -560%. However, the 60.6% gross margin is a silver lining, signaling cost efficiency and profit potential once the new tech is monetized.

The earnings report emphasizes ongoing investments in next-generation quantum technologies, which places immediate strain on margins but could unlock significant revenue streams. Rigetti’s commitment to R&D, resembling a tech start-up more than a mature enterprise, remains a double-edged sword—potentially massive payoffs against high present costs.

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Market participants must gauge how these variables, in synergy with Rigetti’s strategic displays at the SEMICON Europa, influence stock trajectories. The keynote by their CEO champions advances that underpin Rigetti’s roadmap, poised for high-fidelity systems to redefine quantum potential by 2025—an ambitious timeline that investors should scrutinize closely.

Market Movement Predictions: From Breakthrough to Boom

The buzz around Rigetti’s quantum leap epitomizes the crossroads at which tech aspiration meets market practicality. Expectations weave a tapestry of possible outcomes as Rigetti ties its destiny to quantum computing’s maturation. The sentiment across market stakeholders—investors and analysts—is cautiously optimistic, banking on Rigetti’s landmark achievements to justify their bullish stances.

Quantum computing’s evolution enhances Rigetti’s narrative, embedding it into investor consciousness. Their traction in error correction realms could be a harbinger of greater integrations, partnerships, and applications far beyond what current terms can measure. These dynamic prospects evoke curiosity, arguably essential for Rigetti to maintain its allure in an ever-competitive landscape.

Conclusion: Balancing Hype with Vigilance

In sum, while Rigetti’s recent progress is groundbreaking, they walk a tightrope between innovation and financial viability. As millionaire penny stock trader and teacher Tim Sykes says, “Small gains add up over time; focus on building wealth gradually, not chasing jackpots.” This mindset aligns with the stock’s recent behavior, which underscores trader zeal tempered with realism, reflecting a common thread among tech disruptors venturing into new domains. Stakeholders now await evidence of a transition from quantum potential to actual earnings—critical for future bullish validations. Rigetti’s quest, akin to a rollercoaster, is replete with highs that thrillingly portend profitable breakthroughs, yet caution remains a prudent companion as this journey unfolds.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”