Rigetti Computing Faces Volatility Amid Long-Term Potential in Quantum Computing Sector
StockInvest.us, 4 weeks ago
Technical Analysis
Rigetti Computing, Inc. (RGTI) closed on January 17, 2025, at $9.83, marking a significant decline of 12.54% from the previous trading session. This sell-off resulted in a move towards the lower end of the daily range, with a low of $9.77. The stock has shown a mean reversion pattern, reflected in a reversal from recent highs following a surge. The volume reached 152.18 million, well above the average of 114.85 million, indicating heightened investor activity.
The RSI14 stands at 41, suggesting the stock is nearing oversold territory, possibly hinting at a forthcoming technical rebound. Notably, the stock remains above its 50-day moving average of $6.94 and significantly above the 200-day moving average of $2.51, indicating a sustained upward trend despite recent volatility. The MACD over three months supports bullish momentum, albeit weakening, while an ATR of 27.74 suggests continued price volatility.
Short-term support is established at $8.95, while resistance looms at $10.04. With the technical indicators showing mixed signals, RGTI's next trading day (January 21, 2025) is likely to witness sideways movement within this range with volatility.
Fundamental Analysis
Rigetti Computing operates in the nascent but promising field of quantum computing. Fundamentally, despite a negative EPS (TTM) of -$0.37, which reflects ongoing operational losses, the stock continues to command investor interest due to its position as a market innovator. The negative PE ratio of -26.57 exemplifies unprofitability yet is typical for high-potential technology stocks in growth phases.
The current market cap stands at $2.38 billion, illustrating significant investor confidence relative to earnings. Analyst consensus marks Rigetti as a 'Buy,' reflected by 4 'buy' ratings and a median target of $2, much lower than the current trading price, indicating a divergence between market valuation and analyst expectations.
Recent news highlights the volatile nature of the quantum computing sector, with drastic movements in price, hinting at speculative trading. Last week's surge, of which Rigetti was a part, was noteworthy, albeit part of a broader market movement rather than individual corporate developments.
Intrinsic Value and Long-term Potential
With a DCF value of approximately -$7.48, the intrinsic value assessment signals that Rigetti is currently overvalued when considering conventional cash flow methods. However, in the quantum computing sector, such traditional valuations often fail to capture the potential revolutionary impact and future market capture.
In the long-term, Rigetti represents an opportunity contingent on quantum computing's commercial viability. Industry momentum, strategic partnerships, and technological advancements will play pivotal roles in determining its trajectory.
Overall Evaluation
Considering the current technical and fundamental factors, Rigetti appears poised for short-term volatility amidst long-term speculative potential. Given the recent stock surge and subsequent decline, the present valuation seems speculative rather than grounded in sustained financial performance. As a result, Rigetti can be categorized as a 'Hold' for investors seeking exposure to quantum computing's long-term potential, without the immediate risks associated with entry at current levels. Investors should remain vigilant of sector news and market sentiment, as these are key drivers of near-term stock movements.