Sign InRigetti Computing Plummets 45.41% Amid High Volatility and Negative Sector Sentiment
Summary
As of January 8, 2025, Rigetti Computing, Inc. (RGTI) plummeted 45.41% to $10.04 amidst heightened trading activity and negative investor sentiment following unfavorable comments within the quantum computing sector, suggesting a cautious 'Hold' rating as volatility is expected to continue while the stock struggles against its intrinsic overvaluation and challenges in achieving commercial viability.
Technical Analysis
Rigetti Computing, Inc. (RGTI) experienced a substantial loss in value, falling by 45.41% to close at $10.04 on January 8, 2025. The trading session was characterized by a high volume of 296.14 million shares, significantly above the average volume of 86.30 million shares, reflecting heightened investor activity and possible panic selling due to recent news. The current Relative Strength Index (RSI14) of 48 places the stock in a neutral zone, suggesting that it has not yet reached an oversold level despite the dramatic price drop.
The 50-day moving average of $5.98 and the 200-day moving average of $2.27 indicate a previously upward trend, which might see a temporary setback following recent developments. The Moving Average Convergence Divergence (MACD) at 4.46 suggests bullish momentum; however, this might need a reevaluation due to recent volatility.
Key support and resistance levels are observed at $9.37 and $10.69, respectively. However, the Average True Range (ATR) of 29.62 suggests high volatility, making support and resistance levels potentially more dynamic in the upcoming days.
Fundamental Analysis
Fundamentally, Rigetti's performance appears challenged by a negative EPS of -0.37 and a negative price-to-earnings ratio (-27.14), indicating a non-profitable status. The recent news impacting the quantum computing sector, especially Nvidia CEO's comments about the distant commercial viability of quantum computing, has likely distorted investor sentiment and dramatically repriced the stock.
The company holds a market capitalization of $2.43 billion, underscoring its scalar presence in the quantum computing niche. However, the current discounted cash flow (DCF) model estimates a negative intrinsic value, suggesting potential overvaluation based on future cash flows.
Short-term Stock Performance Prediction
Considering the negative sentiments surrounding the sector, Rigetti may experience continued volatility for the next trading day (January 10, 2025) and possibly throughout the week. Short-term price movement may hover within the support and resistance bands, affected by market reactions to ongoing news and technical corrections. A retest of the $9.00 support may occur, with cautious movement back towards $10.69 depending on volume and market sentiment shifts.
Intrinsic Value and Long-term Investment Potential
The intrinsic value calculation, at a negative DCF, suggests that Rigetti's current stock price may not reflect its true economic worth, considering future cash flows. Long-term investment in Rigetti hinges on the successful maturation of quantum computing as a commercial technology, which industry leaders like Nvidia suggest could still be decades away.
Long-term potential could be promising if Rigetti leads in developing commercially viable quantum solutions, but investors must be prepared for extended volatility and potential setbacks.
Overall Evaluation
In light of the recent market correction and sector-specific headwinds, Rigetti Computing, Inc. (RGTI) appears to be a 'Hold' candidate. The stock shows potential, but current market conditions and fundamental analyses indicate a cautionary stance until there is more clarity on the broader sector trajectory and Rigetti's position within it. Current investor sentiment and high volatility necessitate a vigilant, analytical approach to any stock position in the near term.
