Rigetti's Record High Was a Trap: Insiders and Institutions Are Fleeing

The scene was set for a classic pump-and-dump. In October, Rigetti Computing's stock hit a record high of $56.34, a 6,850% gain over its previous 12 months. This wasn't just a rally; it was a momentum explosion fueled by a wave of hype around quantum computing. The setup was perfect for a falling knife: extreme valuation, fading fundamentals, and a stock price that had left reality far behind.

The numbers told the real story. At that peak, the company traded at a staggering 1,033x sales ratio on its $7.74B market cap. That multiple is absurd for a business whose revenue declined 18.1% year-over-year. You're paying a fortune for a shrinking pie. This is the definition of a speculative bubble, where the only thing growing is the price, not the underlying company.

So, the core question for any investor staring at the post-crash price is whether this dip is a buying opportunity or a trap. The record high was built on pure momentum and future promises. When the first negative signal hit-insider selling, a brutal revenue drop, and a cash burn rate that requires constant dilution-the entire house of cards began to collapse. The stock has since been cut in half. The question now is whether the smart money sees a value play in the wreckage, or if the fall is just beginning.

Smart Money Exit: The Insider and Institutional Flight

The record high was a trap, and the smart money is fleeing. When insiders and institutions start selling, it's a clear signal that the real story behind the hype is far worse than the numbers on a chart. Rigetti's post-peak collapse has been accompanied by a near-total exodus of both types of capital.

The most telling signal comes from the top. CEO Subodh Kulkarni sold his entire position at $12 per share during the crash. That's a complete lack of skin in the game. While retail investors were chasing momentum, the man at the helm was cashing out at a steep loss, a classic red flag that aligns with the company's deteriorating fundamentals.

The institutional flight has been even more dramatic. In September 2025, institutional ownership stood at 72.1%. By December, it had collapsed to 0.0%. That's a 95.18% year-over-year decrease in the number of institutional filers, a near-total wipeout of professional interest. The total institutional value of Rigetti shares fell to just $4.9 million, down from a peak, indicating a massive net outflow of smart money.

Some institutions did increase holdings in December, but that was a tiny, isolated move against a tidal wave of selling. The bottom line is that the whale wallets are emptying. When the people with the best information and the deepest pockets are exiting en masse, it's a powerful vote of no confidence. The record high was a pump; the insider and institutional sell-off is the dump.

The Fundamentals: Revenue Shrinks as Cash Burns

The record high was a fiction. The reality, laid bare in the numbers, is one of a shrinking business burning through cash at an alarming rate. This isn't a story of scaling; it's a story of survival.

The most critical metric is revenue. In the third quarter, Rigetti generated just $1.95 million. That's a significant decline, down 18.1% year-over-year. For a company trading at a 1,033x sales ratio, this shrinking pie makes the valuation not just absurd, but unsustainable. You can't justify a $7.74 billion market cap on a business losing money hand over fist.

The cash burn is even more alarming. During that same quarter, the company burned through $200.97 million. That's a massive outflow that requires constant dilution to fund. This isn't a growth company spending aggressively for future gains; it's a cash-hungry entity simply trying to stay afloat. The need for continuous capital raises through at-the-market (ATM) offerings is a direct consequence of this burn rate, which is the opposite of smart money accumulation.

Then there's the missed technical milestone. The company was supposed to launch its 100+ qubit system by late 2025. That goal is now in question. For a quantum computing play, hitting key technical benchmarks is supposed to be the catalyst for valuation. Missing it removes a potential floor for the stock and signals deeper operational challenges.

The forward view isn't much better. The Zacks consensus projects a 37.5% year-over-year earnings growth to -$0.05 per share, but that's a minor improvement on a deeply negative bottom line. More telling is the full-year revenue forecast: expected to be essentially flat year-over-year. This isn't growth; it's stagnation. The setup is clear: shrinking revenue, massive cash burn, and a missed technical goal. When the fundamentals are this weak, the stock's fate is sealed. The smart money isn't buying the hype; they're fleeing the financial reality.

Catalysts and Risks: What to Watch for the Thesis

The thesis here is clear: the record high was a trap, and the smart money is fleeing. The next few catalysts will confirm whether this is a dead cat bounce or the start of a deeper decline. The key signals to watch are the filings that reveal what insiders and institutions are doing with their own money.

First, watch for further insider selling filings (Form 4) or 13D/G filings from new large holders. The pattern is already set: CEOs and CTOs sold during the crash, and the CEO is now completely out of the stock. Any new Form 4s from remaining executives would be a bearish confirmation of a lack of skin in the game. Conversely, a 13D/G filing from a new large holder would be a major red flag, indicating a potential activist or hostile takeover bid that could destabilize the stock further. The absence of such filings might suggest the selling is done, but it doesn't change the fundamental deterioration.

The next major catalyst is the Q4 earnings report. Based on the schedule, it's due soon. This report is a make-or-break event. The company has already shown a 18.1% revenue decline and a massive $200.97 million cash burn in Q3. Any guidance that suggests this trend is continuing or accelerating could trigger another sharp drop. The market has already punished the stock for weak fundamentals; another miss would likely be the final nail.

The primary risk is that the stock remains range-bound between $20 and $30. This would punish momentum traders who bought the dip, while the fundamental deterioration continues. The stock might trade sideways as the cash burn forces more dilution, but without a catalyst to drive it higher. This range-bound stagnation would be a slow bleed for shareholders, as the company's valuation remains detached from its shrinking revenue and massive losses.

The bottom line is that the smart money has spoken. The filings show a total exodus. For the thesis of continued decline to hold, we need to see that sentiment solidify through new insider selling or a disastrous earnings report. If neither happens, the stock could find a temporary floor. But until then, the path of least resistance is down.