Rigetti Computing's valuation concerns

Rigetti Computing's valuation concerns have risen following a $100 million U.S. Department of Commerce grant awarded to the company for quantum miniaturization research. The grant, set to be spent in 15 months, has driven Rigetti's stock price up, despite the company's nominal revenue generation and accumulating operating losses. Rigetti's quantum computers, while among the world's best, still produce high error rates, which has investors questioning the company's valuation premium.

The market impact extends to growth investors in quantum computing stocks, who poured into Rigetti last year, pushing its stock price up. The recent sell-off, driven by valuation concerns and high error rates, has affected these investors and may continue to reprice Rigetti's stock. The broader quantum computing sector and cloud platform providers like Amazon and Microsoft, which offer Rigetti's systems, are also watching closely.

What to watch next includes Rigetti's Q2 2023 earnings, scheduled for late July, which will provide insights into the company's revenue growth and cash burn rate. Additionally, error rate improvements in Rigetti's quantum computers, expected by the end of 2023, could drive a re-evaluation of the company's valuation. Lastly, the U.S. Department of Commerce's progress report on the $100 million grant, due in early 2024, will offer updates on Rigetti's research and development.