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Jack KelloggAvatar
Written by Jack Kellogg
Reviewed by Tim Sykes Fact-checked by Ellis Hobbs

A major news article highlighting Rigetti Computing’s strategic partnership to develop advanced quantum computing solutions is poised to affect its market position significantly. However, on Thursday, Rigetti Computing Inc.’s stocks have been trading down by -4.95 percent.

Can Rigetti Turnaround its Stock Amidst Market Speculation?

Candlestick Chart

Live Update At 14:32:18 EST: On Thursday, January 23, 2025 Rigetti Computing Inc. stock [NASDAQ: RGTI] is trending down by -4.95%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • After alarming statements by Nvidia’s CEO cast serious doubt on the near-term viability of quantum computing applications, many quantum computing stocks endured rapid price declines.
  • Several law firms launched investigations into Rigetti Computing for allegedly issuing misleading business information, which was followed by a substantial stock price drop.
  • Despite previous gains, Rigetti’s stock continued its decline, dropping by 5.1%, maintaining an ongoing instability in the quantum computing sector.
  • Following Nvidia’s CEO’s comments on quantum computing timeline, Rigetti’s shares experienced a plummet of 45%, prompting additional scrutiny from law firms about potential investor misguidance.

Financial Snapshot: Key Ratios and Market Implications

As millionaire penny stock trader and teacher Tim Sykes, says, “Be patient, don’t force trades, and let the perfect setups come to you.” This mindset is crucial for traders who often face the temptation to dive into the first opportunity they spot. Sykes emphasizes the importance of patience and waiting for the right moment, rather than impulsively jumping into trades that might not be ideal. It’s about having the discipline to wait until the odds are favorable before entering a position, which ultimately leads to better decision-making and potentially more successful outcomes in trading. His advice serves as a valuable reminder that sometimes the best action is to simply observe and be prepared for when the optimal trading conditions arise.

Financially, Rigetti’s performance displays mixed signals, triggering questions about the company’s near-term resilience and long-term viability. The quantum company appears troubled by stark negative profitability ratios with glaring figures such as the negative EBIT and EBITDA margins sitting at -489.4% and -431.1%, respectively. Their revenue for the recent fiscal period stands at approximately $12M, with book value per share tauntingly narrow at $0.64, and free cash flow in the red by nearly $17.7M. Despite high gross margins at 60.6%, the other financial metrics communicate a contrasting reality.

On one hand, the company owns enough liquidity, evidenced by a current ratio of 4.8 and a quick ratio of 4.6. Yet, the uninviting price-to-earnings ratio and poor ROE performance make it a cautious option for growth-oriented investors.

Recent financial reports underline mounting operational and R&D expenses, reaching over $18M and $12.7M, respectively. Cash flow setbacks were underscored by substantial investments into short-term securities and absence of substantial debt coverage improvements.

In light of these figures, while the company offers enticing theoretical potential, stockholders might be wary due to persistent losses and cash burn rate. Market speculation compounded by legal probes may further weigh down investor confidence and might lead to prolonged market skepticism.

The Legal and Technological Quandary

Given the troublesome revelations around Rigetti’s stock, especially post the pivotal comments by Nvidia that portray quantum practicality as two decades away, the computation giant stands at a crossroads. These significant setbacks amid climbing AI-focused stock interests pose scrutiny over Rigetti’s promises and forecasts. It paints vexing market uncertainty, leading investors to wonder whether Rigetti can indeed weather this financial and reputational storm.

Industry critics pose dilemmas over Rigetti’s current market strategy, alternate pathways including potential mergers, advocacy for clearer business communication, and meticulous anticipation of sector booms could usher temporary foresight. Realignment towards viable, incremental technological milestones instead of long-ranging quantum efficacy predictions may win back market sentiment.

Amid valued advancements, the company must brig resilient measures to showcase hardware and algorithm innovation that speaks volumes. High investor scrutiny and elaboration on transformative real-world quantum computing benefits may resonate positively with the market and investors.

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Conclusion: Uncertainty Lingers in Market Anticipation

Amid sagging financials and negative sentiment clouding quantum stocks, Rigetti’s story unfolds as industry speculation peaks. The ongoing investigations could divulge more noteworthy details, potentially clarifying missteps or market misunderstandings.

Overall, Rigetti’s rollercoaster reflects not only current industry challenges but echoes a call for prudence among stakeholders rallying behind the promises of pioneering quantum computing capabilities. Traders might seek ample clarity before staking claims amid financial fog. As millionaire penny stock trader and teacher Tim Sykes says, “It’s better to go home at zero than to go home in the red,” a sentiment that resonates deeply with those cautiously navigating the volatile terrain. There remains cautious curiosity around their forthcoming strategies and reassuring forecasts that could glean hope for sustainable turnaround. The story in the quantum space is still unfolding.

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The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”