Why Did Rigetti Computing Stock Fall 13.9% This Week ?
Key Points
While he still maintains a roughly 0.8% stake, a rumor that Rigetti's CEO had sold all of his shares sent its stock lower.
It rebounded on a report that the Trump administration was considering taking an equity stake.
The momentum reversed after a Commerce Department official denied the government was in talks with any quantum companies.
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Shares of Rigetti Computing (NASDAQ: RGTI) fell 13.6% this week, as of 2:06 p.m. on Friday. The drop comes as the S&P 500 and the Nasdaq-100 gained 2.1% and 2.3%, respectively.
The quantum computing company's stock had another week of ups and downs. Last week, the stock exploded after JPMorgan announced it intends to invest in the quantum industry as part of its Security and Resiliency Initiative. The stock fell hard on a rumor that Rigetti's CEO, Subodh K. Kulkarni, had sold all of his equity.
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While this isn't exactly true -- Kulkarni sold a significant portion of his stake, but still holds roughly 0.8% of the company in stock options -- it was enough to keep the stock sliding through Wednesday.
Rigetti shares jumped once again on Thursday after the Wall Street Journal reported that the U.S. Department of Commerce was in discussions to take equity positions in Rigetti and similar companies. However, this report proved to be unverifiable, and shares retreated.
Rigetti's stock is inflated
We've seen pure-play quantum computing stocks absolutely surge over the past year, riding a wave of hype around the technology. Yes, there's real promise here, but I believe investors are way ahead of themselves. I would avoid Rigetti and other pure-play quantum stocks until their valuations come back to Earth.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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