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Rigetti Computing Shares Plunge Amid Mixed Q1 Results

Shares of Rigetti Computing (NASDAQ: RGTI) have dropped significantly by 10% following the release of Q1 2025 results. While EPS improved, a staggering 51% decline in revenue raises concerns for investors.

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AI Rating:   4

Mixed Q1 Results Create Investor Concern
Shares of Rigetti Computing have taken a significant hit after reporting Q1 2025 results that showed mixed indicators. The most notable points are centered around the company's earnings per share (EPS) and revenue growth.

Rigetti reported an EPS of $0.13, marking a notable improvement from a loss of $0.14 per share in the same quarter last year. This represents a significant turnaround and could be perceived as a positive sign for the company's operational effectiveness. However, this positive metric does not come without caveats.

The second key metric, revenue, tells a different story. Rigetti reported a decline in revenue of 51% year over year, with total revenue coming in at $1.5 million—well below the expected $2.6 million. This steep drop in revenue is concerning, especially for a company at this developmental stage. Significant revenue drops generally signal a lack of market demand or operational challenges, both of which can directly impact stock prices negatively.

Furthermore, the net income figure of $62.1 million included significant noncash gains from the revaluation of derivative warrant and earn-out liabilities. This means the reported profit is largely an accounting adjustment rather than a reflection of operational performance. The reliance on noncash gains for profitability could lead investors to question the sustainability of the earnings reported.

Investor Sentiment
The investor sentiment may be adversely affected by the company's admission that it is still in R&D mode, indicating that substantial revenue growth is not expected in the short term. The uncertainty surrounding the future of quantum computing and the long timescale for commercial applications creates additional concerns for investors looking for faster returns.

Despite some positive developments in EPS, the drastic drop in revenue, reliance on accounting gains for profitability, and a long path ahead for the sector suggest that investors may want to exercise caution before investing in Rigetti Computing at this time.

Stocks:  RGTI