Motley Fool Echoes DeepValue's Caution on Rigetti's Valuation and Accuracy Gaps

What happened

The Motley Fool recently questioned investing in Rigetti Computing, highlighting its extreme valuation against minimal revenue and noting that while systems are fast, accuracy lags competitors. This aligns with DeepValue's 'STRONG SELL' rating, which critiques Rigetti's 550x 2024 revenue multiple, shrinking sales, and heavy reliance on government contracts. Financials reveal Q3 2025 revenue fell to $1.9 million with gross margins compressing to 21%, underscoring fundamental weakness despite technical milestones like a 36-qubit system. Media coverage has shifted from celebrating contract wins to warning about valuation risks, reflecting growing skepticism over Rigetti's ability to justify its $6 billion market cap amid persistent losses. Overall, the narrative reinforces that Rigetti remains a speculative play with high downside potential if execution falters.

Implication

The convergence of critical analyses from The Motley Fool and DeepValue underscores the severe disconnect between Rigetti's market price and its operational reality, with revenue declining and margins deteriorating. Rigetti faces amplified risks from government funding dependencies and competitive pressures, as accuracy issues and slower commercial traction compared to peers like IonQ erode any potential moat. Any disappointment in upcoming hardware milestones or contract renewals could trigger significant downside, given the stock trades on speculative narratives rather than earnings or cash flow. Long-term investors should wait for a substantial valuation reset to near DeepValue's $10 attractive entry or clear signs of sustained revenue growth and margin improvement before considering exposure. In the near term, the asymmetric risk-reward favors sidelining or shorting the stock, as highlighted by DeepValue's base and bear scenarios with 85% combined probability of further declines.

Thesis delta

The Motley Fool article corroborates DeepValue's existing bearish thesis by emphasizing valuation excess and competitive weaknesses without introducing new material information. No shift in the investment case is warranted; if anything, it strengthens the conviction to maintain a 'STRONG SELL' stance until Rigetti demonstrates sustained revenue acceleration or a valuation reset aligns with fundamentals.