Rigetti Computing: Be Wary Of The Overhyped Catalyst

Summary

• Rigetti Computing is unlikely to benefit materially from the $2.7 billion funding from the National Quantum Initiative, which seems to be the catalyst for the stock's sharp rise up recently.
• RGTI management has a patchy record in revenue and margins execution vs consensus expectations.
• At current quarterly FCF burn levels, the unprofitable Rigetti Computing has enough liquidity to last just over 2.5 years, due to a recent $100 million equity raise.
• RGTI's valuation drivers suggest the stock is in an unreasonable hype mode, as forward revenue estimates remain unchanged despite the stocks' sharp climb up.
• Technicals show strong bullish momentum but is nearing a major resistance area. Overall, I believe it is wise to steer clear of RGTI, but also not to be bearish on it as the market's bullish momentum is hard to fight.

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Thesis

I am perplexed by the sharp rise in Rigetti Computing (NASDAQ:RGTI) (NASDAQ:RGTIW):

1. RGTI is unlikely to benefit materially from NQI funding
2. Management has a patchy record in revenue and margins execution
3. At current cash burn levels, the company has been

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.