It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Rigetti Computing, Inc. (NASDAQ:RGTI) have tasted that bitter downside in the last year, as the share price dropped 42%. That's well below the market decline of 9.8%. Because Rigetti Computing hasn't been listed for many years, the market is still learning about how the business performs. It's down 43% in about a quarter.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Given that Rigetti Computing didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Rigetti Computing saw its revenue grow by 74%. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 42% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We doubt Rigetti Computing shareholders are happy with the loss of 42% over twelve months. That falls short of the market, which lost 9.8%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. It's worth noting that the last three months did the real damage, with a 43% decline. So it seems like some holders have been dumping the stock of late - and that's not bullish. It's always interesting to track share price performance over the longer term. But to understand Rigetti Computing better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Rigetti Computing you should be aware of, and 2 of them make us uncomfortable.
Rigetti Computing is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.