Down 23%, Should You Buy the Dip on Rigetti Computing Stock?

Quantum computing is getting a lot of attention from investors right now as some look for the next big thing in the tech space. The result has been some high-flying quantum computing stocks, with Rigetti Computing (NASDAQ: RGTI) rising 823% over the past year.

But Rigetti's stock is taking a breather right now and is down 23% since the beginning of the year. That pullback may make buying Rigetti stock an alluring idea to some investors.

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Here are three reasons why you should resist the temptation.

Image source: Getty Images.

1. Quantum computing is still a mostly unproven market

Rigetti makes quantum computing hardware, software, and quantum computing cloud systems that it sells to customers, and some of them are big tech players like Microsoft and Amazon. The company is tapping into a quantum computing hardware and software market that could be worth up to $170 billion by 2040, according to Boston Consulting Group.

But while Rigetti's customers and sales are more than theoretical, the mass adoption of quantum computing is still speculative. There aren't many practical applications for quantum computing at the moment, and most companies are still trying to figure out how to reduce the amount of errors their systems produce.

Does quantum computing hold lots of promise to surpass existing computing capabilities? Absolutely. But is Rigetti or any of its peers on the cusp of truly revolutionizing how companies and consumers process information? Most likely not. This makes any investment in the company right now a fairly speculative move.

2. Rigetti's sales are slipping

One thing that start-ups in a new market should be able to do is increase sales. But Rigetti's revenue has been on a downward trajectory. The company has sales of just $1.5 million in its recently reported first quarter, down nearly 52% from the year-ago quarter.

This wasn't just one bad quarter of sales, either. The company's full-year 2024 revenue was $10.8 million, down 10% from the previous year.

Rigetti's management said on the first-quarter earnings call that significant commercial sales won't occur until about three to five years from now. Meanwhile, the company's operating loss widened to nearly $22 million in the quarter.

It's worth noting, though, that the company has $237.7 million in cash and cash equivalents. So it's likely Rigetti has enough money to continue its operations for a while. But it also means that if you buy shares of Rigetti now, you shouldn't expect significant revenue from the company for a long time.

3. Rigetti's stock is shockingly expensive

Rigetti's shares have a price-to-sales multiple of 197, which is very expensive by any measure. Investors have gotten ahead of themselves in their optimism over this stock and driven its share price up over 800% over the past year. I'll reiterate here that Rigetti had just $1.5 million in sales in the most recent quarter, and those sales are declining.

Buying this stock now, after its massive share price gains and high price-to-sales ratio, looks like an unwise move. Instead of buying Rigetti now, a much better option may be to wait and see if the company is able to significantly increase its sales and narrow its losses over the next few years.

Betting your money in a speculative market on a company with unproven results that's already experienced unwarranted share price gains seems much more like gambling than investing.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.