Is Rigetti Computing Stock a Buy Now?
Key Takeaways
Quantum computing has emerged as the next possible "it" trend among investors, even as we're currently in the midst of an artificial intelligence boom. Some investors may be worried missing...
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investment
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July 11, 2025
06:05 AM
The Motley Fool
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Quantum computing has emerged as the next possible "it" trend among investors, even as we're currently in the midst of an artificial intelligence boom
Some investors may be worried missing out on the next big thing, especially considering that quantum computing could be worth an estimated $840 billion by 2040
That massive potential is an understandable draw for many investors
However, quantum computing has some significant hurdles, including overcoming a lack of practical applications
And that's on top of some of the specific growth blems companies are having, Rigetti Computing (RGTI -4. 53%) included
If you're considering betting on Rigetti as it chases after quantum computing riches, here are a few reasons why you shouldn't
Image source: Getty Images
Rigetti sales are moving in the wrong direction One important trait investors should expect to see from any company betting on an emerging trend is for that company to generate sales at a rapid pace
Unfortunately, Rigetti's revenue is on the decline and has been for a while
Sales were just $1. 5 million in the first quarter (which March 31), a massive 52% drop from the year-ago quarter
Things don't look much better if we zoom out and look at the company's revenue for 2024, which tumbled 10% to $10
Rigetti's management said on the recent earnings call that significant quantum computing revenue could be three to five years away
That may be fine for some companies, but considering that Rigetti's stock has soared 1,300% over the past year, declining sales are a big blem
It's burning through cash In addition to falling revenue, Rigetti is spending significant sums of money to compete in the quantum computing space
Rigetti had an operating loss of nearly $22 million in the first quarter, and its cash pile is on the decline
The company's cash and cash equivalents dropped nearly 47% to $37 million, and with sales falling, there's no end in sight for Rigetti's cash burn
Companies in the early stages of growth often burn through cash, so this isn't necessarily a blem on its own
But the blem is that Rigetti doesn't have any sales growth to offset all of its spending
Growth companies can spend lots of money to expand their, but they need to be generating substantial revenue at the same time
Rigetti is failing at that second part
Its valuation is sky high Admittedly, it can be hard to value young companies taking huge bets in
But that doesn't mean that stocks flying high in nascent shouldn't be scrutinized
As such, I think it's blematic that Rigetti's stock has a price-to-sales ratio of 324, which soars far above the S&P 500's average P/S multiple of 3
If meaningful revenue doesn't eventually come, then Rigetti's sky-high valuation may come back down to earth, or at least back into the stratosphere
As it stands right now, this stock is just too expensive, and its price appears to be rising based on the hope of quantum computing breakthroughs
I'm comfortable sitting this stock out, and investors who are interested in it should know that there's a considerable risk in putting their money in Rigetti
With its price already up 1,300% over the past year and sales on the decline, Rigetti seems more a meme stock than an investment
Chris Neiger has no position in any of the stocks mentioned
The Motley Fool has no position in any of the stocks mentioned
The Motley Fool has a disclosure policy.
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