Investors in quantum computing firm Rigetti Computing faced a difficult week as the company reported disappointing quarterly results coupled with a significant loss of government funding. While the company managed to exceed profit expectations, a severe revenue decline and a failed bid for a key U.S. defense contract sent its stock price tumbling, raising questions about its recovery prospects.
Government Contract Loss Deals Major Blow
A substantial setback emerged from Washington, where Rigetti failed to secure selection for Phase B of the Defense Advanced Research Projects Agency’s (DARPA) Quantum Benchmarking Initiative. This exclusion represents more than just the loss of a non-dilutive funding source; it also damages the company’s credibility within the competitive quantum computing sector.
The government program, structured over seven years, is widely regarded as a quality seal for quantum computing enterprises. Although Rigetti maintains an optimistic outlook, pointing to what it describes as “constructive discussions,” the exclusion from this prestigious initiative remains a significant negative development.
Quarterly Financial Performance Shows Weakness
The company’s third-quarter 2025 results, released Monday evening, revealed fundamental weaknesses in its business model. Revenue plummeted to just $1.95 million, substantially missing analyst estimates of $2.17 million. The year-over-year comparison appeared even more concerning, with revenues collapsing by 18.1%.
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The gross profit margin experienced an especially alarming deterioration, dropping precipitously from 51% in the previous year to a mere 21%. Company management attributed this sharp decline to unfavorable contract pricing and shifts in revenue composition—explanations that failed to reassure concerned investors.
Meteoric Rise Gives Way to Steep Decline
Rigetti’s stock had previously delivered an extraordinary performance, skyrocketing by over 1,500% within a single year. However, since reaching its peak in October, the shares have surrendered 55% of their value. The recent disappointing news accelerated this downward trajectory, with the stock plunging 6.4% in pre-market trading alone on Tuesday following the announcements.
Despite these challenges, market analysts continue to maintain a “Moderate Buy” rating on the company. Rigetti has committed to delivering a system with over 100 qubits by late 2025, followed by 150+ qubit technology in 2026, and potentially exceeding 1,000 qubits by 2027. Whether these ambitious technological targets will be sufficient to restore investor confidence remains uncertain amid current operational and financial headwinds.
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