Why Rigetti Computing Stock Keeps Going Up
Key Points
The U.S. Department of Commerce will award Rigetti Computing $100 million to research quantum miniaturization.
Rigetti will burn through that cash in 15 months.
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Yesterday, as you've probably heard, The Wall Street Journal reported on a Trump Administration plan to award $2 billion to nine quantum computing companies -- Rigetti Computing (NASDAQ: RGTI) among them -- and to take government equity stakes in the companies in return. Rigetti shares started moving one day before the announcement was made, then rocketed higher yesterday -- and higher again today.
Up 18% through 10:55 a.m. Friday morning, Rigetti shares have gained an astounding 63% in just three days of trading, and investors are wondering: Is any price too high to pay for this quantum computing stock?
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And now it's official
Shortly after WSJ broke the story, the U.S. Department of Commerce confirmed that not only does it plan to award grants, but it has in fact already signed letters of intent to do so.
Operating under the CHIPS and Science Act, Commerce will "support and accelerate critical research and manufacturing of technologies for the quantum ecosystem to ensure continued United States leadership and national security." Two quantum foundries, Globalfoundries (NASDAQ: GFS) and International Business Machines (NYSE: IBM), will receive $375 million and $1 billion, respectively.
Rigetti and five others will receive $100 million apiece, and the ninth company will receive $38 million. Each of the seven non-foundry recipients will focus on specific technologies needed to build quantum computers. Rigetti in particular will focus on miniaturization and cryostat devices for maintaining extremely low temperatures.
What does this mean for Rigetti stock?
The question now is how much good even this money can do for Rigetti, which is burning more than $80 million a year. Even if Rigetti gets all of the "up to $100 million" it's allotted, this adds only about 15 months to its lifespan.
Rigetti's not out of the woods yet.
Should you buy stock in Rigetti Computing right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GlobalFoundries and International Business Machines. The Motley Fool has a disclosure policy.
