Rigetti Computing: Bullish Options, Earnings Catalysts, and the Quantum Gamble

The stock of rigetti computing (RGTI) surged 18% in late April 2025, fueled by record bullish options activity ahead of its May 12 earnings report. The rally, driven by a fivefold spike in call options trading, reflects investor optimism about the company’s technological progress and strategic partnerships. Yet beneath the surface, Rigetti’s financial struggles and the uncertain timeline for commercializing quantum computing cast long shadows. This article dissects the factors behind the stock’s volatility, evaluates the risks and rewards, and assesses whether the rally is sustainable.

The Options Surge: A Bet on Earnings Catalysts

Rigetti’s stock surge was not driven by fundamentals alone but by a surge in speculative trading. In late April, 54,484 call options changed hands—five times the typical volume—primarily in the 9.5 and 10 strike prices expiring on May 2, 2025. This activity pushed implied volatility to 119.31%, signaling extreme uncertainty ahead of the May 12 earnings. The Put/Call Ratio dropped to 0.55, with calls trading nearly twice as much as puts, a stark indicator of bullish sentiment.

The catalyst? Investors are banking on Rigetti to deliver milestones that could accelerate adoption of its quantum computing systems. Recent highlights include:
- Launch of the 84-qubit Ankaa-3 system, achieving 99% gate fidelity, a critical step toward error reduction.
- A $205 million partnership with Quanta Computer Inc. to advance superconducting quantum hardware.
- Deployment of its first Novera 9-qubit system to Montana State University, signaling early commercial traction.

However, these advances exist in a high-risk environment. Rigetti’s stock remains volatile, having plummeted to a $0.38 all-time low in May 2023 before rebounding to $8.50 by April 2025. The company’s valuation, at a 140x price-to-sales (P/S) ratio, far exceeds peers like IonQ (IONQ), which trades at 19x P/S, raising concerns about overvaluation.

Earnings and Financial Realities: Can Rigetti Deliver?

The May 12 earnings report will test investor optimism. Analysts project a narrower net loss of $0.05 per share for Q1 2025, compared to $0.14 in Q1 2024, but the company’s financials remain shaky. Fourth-quarter 2024 results showed:
- Revenue fell to $2.3 million (down from $3.4M in 2023).
- Gross margin compressed to 44% from 75%, due to lower-margin contracts.
- A $153 million net loss, inflated by non-cash derivative liabilities, despite a $153M share sale boosting cash to $217 million.

Rigetti admits commercial sales are still 4–5 years away, leaving it reliant on R&D spending and dilutive fundraising. Cash burn of $62 million in 2024 suggests liquidity may last only three more years without new funding—a critical vulnerability.

The Quantum Computing Landscape: Headwinds and Opportunities

Rigetti’s success hinges on quantum computing’s adoption, but the path is fraught with challenges.
- Technological Barriers: Quantum systems require error rates near zero and scalability, which remain distant. Even Nvidia’s CEO has questioned the feasibility of “useful” quantum systems within 15 years.
- Competitive Pressure: Tech giants like IBM, Microsoft, and Alphabet’s Willow Chip are pouring resources into quantum research, threatening to outpace startups.
- Market Skepticism: GuruFocus estimates Rigetti’s GF Value at $0.92 per share in one year, implying an 89.89% downside from April 2025 prices, citing overvaluation and cash burn risks.

Yet optimism persists. Five analysts set an average 12-month target of $14.80, implying a 62.6% upside, while six brokerage firms rated Rigetti an average 2.0 (“Outperform”). The AI-driven calibration of quantum processors and partnerships like Quanta’s $100M investment highlight progress.

Conclusion: A High-Risk, High-Reward Gamble

Rigetti’s 18% rally reflects a bet on its quantum breakthroughs and upcoming earnings. However, the stock’s valuation, financial fragility, and long commercialization timeline make it a speculative play, not a core investment.

Supporting the Bull Case:
- Analysts’ $14.80 average target implies upside if Rigetti delivers Q1 results exceeding expectations and announces further partnerships or technical milestones.
- The Ankaa-3’s 99% gate fidelity and modular architecture could attract enterprise clients in pharmaceuticals, finance, and logistics.

Bear Risks:
- A $0.92 GF Value underscores valuation concerns, with shares trading at 140x sales versus peers.
- Cash burn and dilution (shares increased 151% post-IPO) could pressure liquidity and investor confidence.
- Competitors like IBM and Microsoft may leapfrog Rigetti’s advancements, sidelining its niche.

Investors must weigh the transformative potential of quantum computing against Rigetti’s execution risks. The May 12 earnings will be a litmus test: strong guidance or product updates could sustain the rally, while misses or valuation critiques could trigger a collapse. For now, RGTI remains a high-risk, meme-style stock—ideal for speculators, but perilous for the risk-averse.

In the end, Rigetti’s journey mirrors the quantum computing industry itself: a race between exponential promise and exponential uncertainty.