Advances in quantum computing by companies like Rigetti Computing (RGTI) point to a promising future for growth in computational power. With the anticipated introduction of its 84-qubit Ankaa 3 system by the end of 2024 and a 100+ qubit system by the end of 2025, the company is staking its claim in the quantum computing space. Collaboration with renowned firms such as NVIDIA (NVDA), Fermilab, and NQCC and the potential for DARPA contracts paint a positive picture of growth possibilities. Despite the recent operating loss and liquidity concerns, Rigetti Computing’s innovative technology makes it a high-risk, high-reward investment proposition.
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Rigetti Is Making Substantial Progress
Rigetti is a player in the growing field of full-stack quantum computing, providing quantum computers over the cloud to various clients, including government, enterprise, and research entities. The company created the industry’s first multi-chip quantum processor, a crucial advancement towards scalable quantum computing systems. Rigetti self-manufactures these chips at Fab-1, a dedicated and integrated quantum device manufacturing facility.
The company has outlined an ambitious roadmap focusing on modular system architecture. It is scheduled to produce its 84-qubit Ankaa-3 system, aiming to reach a 99+% median 2-qubit gate fidelity by the end of 2024. By mid-2025, the company expects to introduce a 36-qubit system, followed by a system with over 100 qubits by the year’s end. It aims to develop a 336-qubit system further on the horizon.
Rigetti has made substantial progress in producing quality 9-qubit chips and sees its upcoming 4-chip 36-qubit system as a significant achievement. Further, the company is rigorously working towards improving quantum error correction (QEC) and has produced encouraging results while partnering with Riverlane. This collaboration saw the integration of Riverlane’s quantum error decoder into Rigetti’s 84-qubit Ankaa-2 system, thereby achieving real-time, low-latency quantum error correction.
Lastly, Rigetti introduced the ABAA (Alternating-Bias Assisted Annealing) technique for precisely targeted qubit frequencies, which is being leveraged for fabricating chips for its Novera QPU and the future Ankaa-3 system.
Rigetti’s Recent Financial Results
The company recently reported its financial results for the third quarter. Total revenue was $2.38 million. However, the operating expenses for the same period exceeded this considerably, reaching $18.6 million, resulting in an operating loss of $17.3 million and a net loss of $14.8 million or $0.08 per share.
Despite these losses, the company has maintained a robust financial position with cash, cash equivalents, and available-for-sale securities totaling $92.6 million. The company has taken steps to build its financial strength further, announcing the sale of 50 million shares of common stock at $2.00 per share to two institutional investors.
Rigetti plans to use the net proceeds toward working capital and general business operations. The company forecasts that the resulting funds, combined with current cash reserves, will be sufficient to support the ongoing development of its technology and the growth of its onsite quantum computing business, eliminating the need for additional capital fundraising.
What Is the Price Target for RGTI?
The stock has jumped up over 140% in the past quarter. It trades near the high end of its 52-week price range of $0.66 – $2.36 and shows ongoing positive price momentum as it trades above all major moving averages. At this early stage, valuation analysis based on traditional ratios isn’t very useful as the share price is driven more by animal spirits.
Analysts following the company have been bullish on RGTI stock. For example, B. Riley recently raised the firm’s price target to $4 from $3.50 while maintaining a Buy rating on the shares, noting numerous potential catalysts driving the investor sentiment in the quarters and years ahead.
Based on the recommendations of three analysts, Rigetti Computing is rated a strong buy overall. The average price target for RGTI stock is $2.25, representing a potential upside of 2.27% from current levels.
Rigetti in Summary
Rigetti is making progress in its quantum technology while collaborating with industry giants. Undeniably, the operating losses are a concern, but with a solid cash reserve and a recent funding round, Rigetti appears well-positioned to finance its quantum leap. Given its advanced technology, strategic collaborations, and financial resilience, RGTI presents a compelling investment proposition for those who believe in the potential of quantum computing.
