Rigetti Computing Plunges 11.63% on Downgrade as $2.39 Billion Sizzling Volume Ranks 32nd Amid 52% Market Cap Overhang

Market Snapshot

Rigetti Computing (RGTI) closed on November 3, 2025, with a 11.63% decline, marking one of the most significant single-day drops among U.S. equities, as its trading volume surged to $2.39 billion—the 32nd highest of the day. The stock’s performance followed a downgrade from B. Riley Securities, which shifted its rating from “Buy” to “Neutral” despite raising the price target to $42 from $35. This sharp decline occurred against a backdrop of a 190% year-to-date rally, pushing the company’s market capitalization to $14.3 billion, which now represents approximately 52% of the projected total addressable market for quantum computing between 2030 and 2035. The drop reflects investor caution amid valuation concerns and broader sector volatility.

Key Drivers

Analyst Downgrade and Valuation Concerns

B. Riley Securities’ downgrade of Rigetti Computing to “Neutral” underscored growing skepticism about the stock’s valuation despite its technological advancements. While the firm raised its price target to $42, it emphasized that Rigetti’s current price of $44.27 already exceeds this threshold, suggesting the stock may be overvalued. The firm noted that the company’s Price/Book ratio of 25.94 and high revenue multiples position it among the most expensive equities in its sector. Analysts also highlighted that Rigetti’s market capitalization now incorporates a significant portion of its long-term commercial potential, reducing the margin of safety for investors. This downgrade aligns with broader market sentiment, as evidenced by a wide range of analyst price targets ($18 to $50), indicating deep uncertainty about the company’s path to profitability.

Financial Health and Cash Burn

Rigetti’s financials present a mixed picture. The company reported a quarterly operating cash burn of approximately $19 million, a figure deemed manageable by B. Riley given its $572 million in cash reserves and a debt-to-equity ratio of 0.01. However, concerns persist about delayed U.S. government funding authorizations, which could disrupt sales pipelines and exacerbate cash flow risks. The firm also pointed to Rigetti’s lack of fourth-quarter guidance as a red flag, limiting visibility for investors. While the company secured $11.5 million in new contracts in September—expanding its commercial reach—its trailing twelve months (TTM) revenue stands at just $7.93 million, with an operating margin of -976.08%. These metrics highlight the challenge of scaling revenue while maintaining profitability in a capital-intensive industry.

Technological Progress and Contract Wins

Despite financial headwinds, Rigetti has made notable strides in its quantum computing roadmap. The company announced $21 million in new contracts, including a $5.8 million agreement with the U.S. Air Force Research Laboratory and a £3.5 million project with a U.K. consortium. These deals advance its goal of transitioning from 100-qubit to 1,000-qubit systems between 2025 and 2030. Additionally, Rigetti’s proprietary multi-chip quantum processor and quantum-classical integration infrastructure position it as a leader in scalable quantum solutions. However, the sector’s competitive landscape remains fragmented, with rivals like IonQ and D-Wave Quantum receiving more bullish ratings from B. Riley, which maintained “Buy” recommendations for those firms.

Market Catalysts and Short-Term Risks

The stock’s recent volatility was amplified by speculative news cycles. A prior rally was fueled by rumors of the U.S. Commerce Department considering equity stakes in quantum firms, though the department later clarified it was not engaged in active talks. Similarly, NVIDIA’s GTC event in Washington, D.C., reignited interest in quantum computing but also exposed the sector to broader macroeconomic risks, including potential export restrictions on advanced technologies. With Rigetti set to report third-quarter earnings on November 10, investors will closely watch for signs of progress in commercialization and cost management. Analysts expect a loss of 4 cents per share on $2.26 million in revenue, slightly below the previous quarter’s results, which could further weigh on sentiment.

Institutional and Insider Dynamics

Rigetti’s ownership structure reveals additional layers of complexity. Institutional ownership stands at 40.88%, with notable insider selling activity in the past three months. This contrasts with the company’s strong balance sheet, as evidenced by a current ratio of 41.57 and liquid assets exceeding short-term obligations. However, the Beneish M-Score of 58.86 raises questions about potential financial manipulation, while the Altman Z-Score of 101.96 suggests robust financial strength. These conflicting signals highlight the challenge of reconciling Rigetti’s technological promise with its operational realities, particularly as it navigates the transition from R&D to scalable commercial deployment.

Outlook and Strategic Implications

The downgrade by B. Riley reflects a broader recalibration of expectations for quantum computing firms, which have seen rapid valuation expansions amid uncertain timelines for profitability. For Rigetti, the path forward hinges on executing its roadmap to 1,000-qubit systems, securing government and enterprise contracts, and managing cash burn effectively. While the company’s recent contract wins and infrastructure innovations are positive, the market’s focus on near-term financial performance and regulatory risks underscores the need for disciplined capital allocation. With earnings season approaching, the next few weeks will be critical in determining whether investor confidence in the sector can withstand the current wave of caution.