Why Rigetti Computing Stock Just Crashed
Key Points
The Trump Administration has issued two executive orders bolstering quantum computing research.
One has a deadline of 2028 -- the other 2031.
Rigetti may not earn its first profit before 2031.
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Rigetti Computing (NASDAQ: RGTI) stock, which managed to hold more or less steady earlier in the week, suddenly stumbled and fell 9.2% through 2:55 p.m. ET Wednesday.
Helping to support the stock price earlier was a Trump Administration order promoting the development of quantum computing, which sparked a wave of call option buying yesterday -- as many as 10.4 calls purchased for every put, according to StreetInsider.com -- indicating traders were heavily bullish on the stock.
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Some good news for Rigetti?
As NBC reports, President Trump on Monday signed an order "to build a powerful quantum computer for scientific research," aiming to have the device operational before he leaves office in 2029.
Further out, the President called for protecting government computer systems from cyberattacks made more powerful by the use of quantum computers, by using other quantum computers to build quantum-resistant cryptography by 2030 or 2031.
And I must say, all of this sounds pretty bullish for a leading quantum computing stock like Rigetti, and a good reason for investors to be bidding it up yesterday.
No bad news for Rigetti stock
The other good news is that there's no specific bad news driving today's sell-off. It's just that all the call-buying yesterday may have gone overboard. The lack of further good news like Monday's may have prompted day traders to cash out today, sparking a momentum crash.
Volatility, of course, is the name of the game in quantum computing stocks, where far-in-the-future advancements (2028? 2030? 2031?) run into analyst forecasts of continued losses for the companies supposed to make the advancements. Analysts polled by S&P Global Market Intelligence warn that it could be 2031 or later before Rigetti earns its first profit.
Even with government support, Rigetti stock remains a risky bet.
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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.
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