Rigetti Computing (NASDAQ:RGTI), which had been riding high on growing optimism surrounding quantum technology, was caught in the crossfire last week after Nvidia CEO Jensen Huang issued a striking forecast about quantum computing.
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Huang predicted that commercial quantum applications remain two decades away, triggering a sharp sell-off across the sector. Rigetti shares bore the brunt of this sentiment, plummeting 51% since his remarks were made public.
Could this recent plunge offer an opportunity to stake a position?
Not according to top investor Michael Wiggins De Oliveira, who sits in the top 4% of TipRanks’ stock pros.
“RGTI’s unpredictable growth rates make it a high-risk investment I’m unwilling to touch,” asserts the 5-star investor.
Wiggins De Oliveira puts an exclamation point on Huang’s comments, arguing that Rigetti remains far from reaching scalability. Moreover, recent history indicates that the company’s Q4 revenues – scheduled to be released in March – could serve as quite the disappointment for investors, with shrinking growth rates likely.
“There’s a large chance that if analysts are right, this business will still report negative growth rates in Q4,” Wiggins De Oliveira adds.
Adding to investor woes, Wiggins De Oliveira highlighted the likelihood of a dilutive capital raise in the coming year – a move that will be part of a long string of funding rounds.
“This isn’t even anywhere near the last capital raise that RGTI will due over the next decade or so, if Huang is even vaguely right that it will take at least 15 years until quantum computing becomes ‘useful,’” the investor argues.
Concluding that it is much too early to understand if Rigetti is the real deal or a cautionary tale, Wiggins De Oliveira rates RGTI shares a Sell. (To watch Wiggins De Oliveira’s track record, click here)
Do Wall Street analysts share a similar perspective? The Street’s current stance on Rigetti presents an interesting conundrum. While the 6 recent Buy recommendations add up to a Strong Buy consensus rating, the average price target tells a rather disconnected story. At $5.20, the target suggests a potential downside of ~42% over the next 12 months. It will be interesting to see whether the analysts downgrade their ratings or upgrade price targets over the coming months. (See RGTI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
