Motley Fool: ‘Sky-high valuations’ of quantum computing company Rigetti limit upside

According to the Motley Fool, mid-cap Rigetti Computing, a pioneer in the emerging quantum computing market, is trading at “sky-high valuations,” which could limit the stock’s near-term gains. However, a recent dip might make now a good entry point for long-term investors, the outlet suggests.

With a market capitalization on the Nasdaq of $3.38 billion, Rigetti is trading at 237 times projected 2025 sales and 99 times projected 2026 sales, reports the Motley Fool. Wall Street analysts expect Rigetti's revenue to reach $14.0 million this year before rising 140% to $33.6 million in 2026.

The Motley Fool describes these valuations as “sky high” and warns that they may cap Rigetti’s short-term share price growth. Still, for investors who are “investing in Rigetti for the next few decades,” its recent pullback may offer a good opportunity to buy.

The Motley Fool refers to Rigetti as a “one-stop shop” for quantum computing. It develops quantum processing units (QPUs) and a cloud platform called Forest, which allows other companies to build their own quantum applications. Its clients include governments, universities, and businesses.

On Monday, May 12, Rigetti released its financial results for the first quarter, which revealed a 52% year-over-year drop in revenue to $1.47 million versus the consensus forecast of only an 8% dip, notes the Motley Fool. The outlet attributes the top-line slump in part to stronger competition from other quantum computing companies and Rigetti’s struggle to secure larger contracts in a challenging macroeconomic environment.

Net income for the first quarter came in at $42.6 million versus a nearly $20.8 million loss a year earlier. However, the Motley Fool points out that this was driven by a noncash gain of $62.1 million. Without it, the company’s net loss would have only slightly narrowed, to $19.5 million. The Motley Fool cautions investors against expectations that Rigetti will remain profitable for the rest of the year.

On May 13, the day after the earnings report was released, Rigetti shares fell almost 15% before rebounding 18% the following day. Earlier this week, the investment firm Craig-Hallum raised its target price for Rigetti by over 16% to $14 per share while reiterating its “buy” rating, as reported by Insider Monkey.

According to MarketWatch, all six analysts covering Rigetti have “buy” recommendations. Their average target price of $14.80 per share suggests upside of over 27% versus the current market price.