Down 50%, Should You Buy the Dip in Rigetti Computing?

Rigetti Computing (NASDAQ: RGTI) has been on a rollercoaster ride since its IPO in 2021. The company, a pioneer in hybrid quantum-classical computing systems, has seen its stock price plummet by over 50% from its 52-week high. This significant decline has left investors wondering whether now is the time to buy the dip or if the worst is yet to come. To make an informed decision, it's essential to analyze Rigetti Computing's recent performance, strategic initiatives, and future prospects.



Rigetti Computing's recent 50% decline can be attributed to several factors:

1. Market Sentiment and Hype Cycle: Quantum computing stocks have been subject to significant hype and speculation, leading to rapid price increases. However, as the hype cycle reaches its peak, investors may be reassessing their positions, leading to a sell-off. This is evident in the comments by tech CEOs like Mark Zuckerberg, who recently tempered enthusiasm for the sector, stating that quantum computing is "quite a ways off" from being a practical paradigm (Barrons, 7 days ago).
2. Lack of Near-Term Revenue and Profitability: Rigetti Computing, like many other quantum computing companies, is still in the early stages of development and has yet to generate significant revenue or achieve profitability. This lack of near-term financial performance can make investors cautious, especially when market conditions are uncertain.
3. Short Selling and Speculation: Short sellers have been active in the quantum computing space, potentially contributing to the recent decline in stock prices. For instance, short interest in Rigetti Computing increased to 44.82 million shares in January 2025, representing 16.01% of the outstanding shares (GlobeNewswire, 6 days ago).
4. Regulatory and Legal Concerns: Rigetti Computing has faced investigations from law firms regarding potential securities law violations. For example, Bronstein, Gewirtz & Grossman, LLC announced an investigation into the company's securities practices (Accesswire, 8 days ago). These investigations can create uncertainty and negatively impact stock prices.



Despite these challenges, Rigetti Computing has implemented several strategic initiatives and turnaround efforts to improve its future performance:

1. Updated Business Strategy and Technology Roadmap: Rigetti has revised its business strategy and technology roadmap to focus on nearer-term priorities, such as delivering the Ankaa-1 84-qubit system in Q1 2023 and improving its performance. The company aims to achieve narrow quantum advantage, which is the point at which a quantum computer can solve a practical, operationally relevant problem significantly better, faster, or cheaper than a current classical solution.
2. Leadership Changes: Rigetti has appointed new leadership for the CFO and CTO positions. Jeffrey Bertelsen has replaced Brian Sereda as the Chief Financial Officer, while David Rivas has been promoted to Chief Technology Officer, replacing Mike Harburn. These changes are expected to bring fresh perspectives and expertise to the company.
3. Workforce Reduction: Rigetti has implemented a workforce reduction of approximately 28% to lower operating expenses and preserve available cash resources. This move is intended to focus the organization on its strategic priorities and improve overall efficiency.
4. Modular System Architecture: Rigetti plans to introduce a new modular system architecture in 2025, starting with a 36-qubit system based on four 9-qubit chips tiled together with a targeted 99.5% median 2-qubit fidelity. By the end of 2025, the company expects to release a system with over 100 qubits with a targeted 99.5% median 2-qubit fidelity. Rigetti plans to develop the 336-qubit Lyra™ system thereafter.
5. Quantum Error Correction (QEC): Rigetti is working with Riverlane to advance its understanding of how to build fault-tolerant quantum computers using QEC technology. The company has demonstrated real-time and low-latency QEC with superconducting qubits, a critical process for developing fault-tolerant quantum computers.
6. Novel Chip Fabrication Process: Rigetti is developing a novel chip fabrication process for scalable, high-performing QPUs. This process aims to improve control over the materials, design, and environment of qubits, enabling the company to scale to higher qubit count systems.

These strategic initiatives and turnaround efforts have the potential to significantly influence Rigetti Computing's future performance by:

* Focusing the company's resources on nearer-term priorities and strategic goals
* Improving the performance and scalability of its quantum computing systems
* Enhancing the company's financial efficiency and cash management
* Strengthening its leadership and technical expertise
* Advancing its research and development efforts in quantum error correction and novel chip fabrication processes

By successfully implementing these initiatives, Rigetti Computing can improve its competitive position in the quantum computing market and enhance its long-term prospects for growth and profitability.

In conclusion, Rigetti Computing's recent 50% decline presents an opportunity for long-term investors to buy the dip, given the company's strategic initiatives and turnaround potential. However, it is essential to monitor the company's progress and reassess the investment thesis as new information becomes available. As always, it is crucial to conduct thorough research and consider your risk tolerance before making any investment decisions.