Rigetti Computing Stock Plunges 36%: What Caused the Sell-Off?

Rigetti Computing (RGTI), a pioneer in hybrid quantum-classical computing, experienced a significant stock price decline in February 2025, with shares falling by approximately 36%. This sharp drop in the company's stock price can be attributed to a combination of macroeconomic concerns, increased competition, and weak financial performance. In this article, we will delve into the factors that contributed to Rigetti's stock price decline and explore the potential implications for the company's future.



Macroeconomic concerns played a significant role in Rigetti's stock price decline. Weak consumer-confidence readings, sticky inflation, and the threat of tariffs on goods imported from Canada and Mexico negatively impacted investor sentiment, leading to a general sell-off in the market. This macroeconomic uncertainty contributed to the decline in Rigetti's stock price, as the company is vulnerable to economic headwinds due to its speculative nature and high volatility (Source: "Rigetti Computing (RGTI -8.98%), one of a group of high-flying quantum computing stocks, took a dive last month as a combination of news items and macroeconomic concerns weighed on the stock.").

Microsoft's Majorana 1 announcement also contributed to Rigetti's stock price decline. On February 19, Microsoft unveiled its Majorana 1, a quantum chip that it claims will lead to quantum computers capable of solving industrial-scale problems in years rather than decades. While this announcement initially caused a brief rally in quantum stocks like Rigetti, it ultimately led to a decline in Rigetti's stock price. This is because the announcement established another big tech giant as a formidable competitor in the quantum computing sector, increasing competition and potentially delaying Rigetti's path to commercial success (Source: "The biggest news from the quantum computing sector last month came on Feb. 19 when Microsoft unveiled its Majorana 1, a quantum chip that it says will lead to quantum computers capable of solving industrial-scale problems in years rather than decades, the timeline that other tech CEOs have estimated.").

Rigetti's financial performance has been lackluster, with revenue falling 26% year-over-year to just $2.5 million in the fourth quarter of 2024. This decline, along with the company's continued losses and negative free cash flow, contributed to investor concerns about the company's fundamentals and its ability to achieve meaningful commercial success in the near term (Source: "Analysts are expecting the company to report revenue of just $2.5 million, which is down 26% from a year ago. That shows that Rigetti is still in its infancy, and quantum computing has yet to have a meaningful impact in the business world.").

High expectations and valuation also played a role in Rigetti's stock price decline. Rigetti's stock price has been driven by investor excitement over quantum computing's potential, leading to a high market cap of over $2 billion despite the company's minimal revenue and significant losses. This high valuation makes the stock more susceptible to declines, as any negative news or market uncertainty can lead to a sell-off (Source: "The company is also vulnerable to macroheadwinds as the stock is likely to fall if the economy weakens. Keep an eye on Q4 earnings, but it will probably take more than that to give the stock a meaningful boost in the current macroenvironment.").



In conclusion, Rigetti Computing's stock price decline in February 2025 was primarily driven by macroeconomic concerns, increased competition from Microsoft's Majorana 1 announcement, Rigetti's weak financial performance, and the high expectations and valuation of the company's stock. These factors are interconnected, as the company's fundamentals and the broader quantum computing sector's developments directly impact investor sentiment and the stock's performance. As Rigetti continues to develop its technology and build a meaningful business, it will be crucial for the company to address these challenges and demonstrate progress in order to regain investor confidence and drive stock price growth.