Why Rigetti Computing Stock Popped Today

Key Points

• Rigetti Computing stock soared 20% this morning, and then saw its gain cut in half.

• The quantum computing start-up is not profitable, and its share price depends largely on momentum.

• 10 stocks we like better than Rigetti Computing ›

Shares of quantum computing company Rigetti Computing (NASDAQ: RGTI) soared as much as 20% in early trading on Friday before giving back about half its gains -- all on no obvious news.

As of 11:20 a.m. ET, Rigetti stock was still up 12%.

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Introducing Rigetti Computing

Rigetti bills itself as "a pioneer in full-stack quantum computing ... selling on-premises quantum computing systems with qubit counts between 24 and 84 qubits, supporting national laboratories and quantum computing centers."

That's both good and bad for investors.

The good side of being a "pioneer" is that it gives early investors in Rigetti a ground-floor investment in an exciting new field of business that could remake how cybersecurity operates and usher in advances in both communications and (of course) computing.

The bad news is you're investing in a start-up with no history of profits and precious little revenue (indeed, Rigetti's revenues have been falling for three years straight), with no guarantee the company will ever find its footing.

Is Rigetti stock a buy?

Analysts who follow Rigetti see no chance the company turns profitable before 2031 at the earliest. And the big risk for investors is that Rigetti might run out of money before it ever begins earning a profit.

Rigetti has $425 million in the bank. Now, it's burning "only" $65 million a year in cash, which should be enough to keep the doors open and the lights on until 2031. Unfortunately, there's no guarantee cash burn won't accelerate and Rigetti runs out of money sooner than that.

In the meantime, you can expect the stock price to run mainly on momentum as quantum computing stocks become alternately more and less popular -- and for even more dramatic changes in stock price like today's.

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Rich Smith 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.