They Warned This Quantum Stock Had Gone Too Far. A Year Later, It’s Down 75%
One analyst firm called the top on a quantum computing stock after a 190% rally, then watched every warning play out in real time. What the timeline reveals about reading a downgrade says more than the price drop itself.
By Halloween 2025, Rigetti Computing (NASDAQ:RGTI) had become one of the loudest trades in the quantum boom. Shares that closed at $19.21 on Sept. 15, 2026, reached $56.34 by Oct. 15, then cooled to $44.27 on October 31.
On Nov. 3, 2025, B. Riley Securities stepped off the ride and cut the stock to Neutral from Buy, a downgrade Barron’s reported that day. Measured from that Oct. 31 close, Rigetti has fallen around 73%. Over the same dates, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) gained 12.8%.
One firm stepped aside. The year that followed explained why.
Why B. Riley Stepped to the Sidelines
B. Riley built its case on two points. First, delays in U.S. government funding authorizations created sales risk for a company that leans heavily on government work. Second, after the 190% rally B. Riley cited for that year, the stock was already pricing in a large share of Rigetti’s long-term commercial success.
The catch sits in the target. B. Riley raised it to $42 from $35 while lowering the rating. That new target still sat below the $44.27 close. Neutral is a step to the sidelines, and no other firm made the same call that day. B. Riley stood alone.
How the Quantum Trade Unraveled
The stock never recovered that level. Rigetti touched $44.38 on downgrade day, then closed at $39.12. The funding risk showed up a week later. On Nov. 10, 2025, Rigetti reported Q3 revenue of $1.947 million, down 18.1% year over year and missing the $2.17 million consensus.
It was also not initially selected for Stage B of DARPA’s Quantum Benchmarking Initiative. The GAAP net loss swelled to $200.97 million, driven by a $181.96 million non-cash warrant charge tied to the earlier rally. Shares ended 2025 at $22.15.
The Q4 report on March 4, 2026, brought another revenue miss: $1.868 million against $2.385 million expected. Full-year 2025 revenue fell to $7.088 million from $10.79 million.
Then the business turned. Q1 2026 revenue nearly tripled to $4.40 million, and Q2 revenue rose 185.3% to $5.138 million. Rigetti also signed a letter of intent with the Commerce Department for up to $100 million over three years, with the department taking an equity stake. That means dilution. The stock kept falling anyway, down to a low of $11.11. CEO Subodh Kulkarni summed up the gap on the August call: “We acknowledge openly that we are not quite close to quantum advantage.”
B. Riley’s U-Turn Came Too Soon
On Jan. 22, 2026, B. Riley moved back to Buy with a $35 target. That was lower than the $42 it set when it downgraded. Shares closed at $24.96 that day and have since dropped 53.49%. The same firm called the exit and then came back early.
Later firms kept lowering the bar. Jefferies cut its target to $20 at Hold on March 5. Northland initiated at Market Perform with a $20 target on April 20. Benchmark started at Buy with a $25 target on July 27. Today, the count stands at one Strong Buy rating, eight Buy ratings, four Hold ratings and zero Sell ratings, with an average target of $28.52.
Verdict: Nailed It
B. Riley highlighted government funding risk and an stretched valuation, and both showed up in the numbers. The DARPA setback and two straight revenue misses confirmed the first. A 72.76% fell while revenue later grew confirmed the second. One catch: The $42 target proved far too generous, and the call came about two weeks after the October high, once the stock had already cooled. The rating carried the call. Investors who stepped aside kept their gains.
Where Rigetti Stands Now
Rigetti traded around $11.61 on Monday, Nov. 2, at the bottom of a 52-week range of $11.11 to $44.52. It still trades at roughly 310x trailing sales, with $541.29 million in cash and investments and no debt.
Bull case: revenue is growing fast, and Washington and the U.K. are putting money behind Rigetti’s chiplet roadmap.
Bear case: a valuation at hundreds of times sales leaves no room for error at a company that expects to keep losing money and is lining up an equity-linked funding deal. A little exposure to a story like this one is fine if it stays small and follows rules (we spelled out both the sizing and the rules in a free speculation guide here: Small Stakes, Big Swings).
For now the evidence tends bearish. Revenue is climbing, but the company won’t reach the roughly 1,000-qubit systems it says commercial value requires for about 3 years. Until then, any rally depends on sentiment. The $28.52 average target reflects real optimism, but price targets have been following the stock down for a year. If Rigetti lifts fidelity on its 108-qubit system and signs the Commerce deal on clean terms, the bull case gets firmer. If the fourth-quarter C-DAC revenue slips, the low will be tested again.
When a firm cuts its rating and raises its target in the same note, pay attention to the rating. It tells you the price has already passed even an optimistic estimate of what the company is worth.
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Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
