Why Did Rigetti Quantum Stock Pop Today?
Key Points
BMO Capital analyst Harsh Kumar recommended buying D-Wave Quantum stock today.
He did not recommend buying Rigetti -- but Rigetti stock is going up even more than D-Wave.
Both companies are burning cash, but D-Wave at least has more cash to burn than Rigetti.
- 10 stocks we like better than D-Wave Quantum ›
D-Wave Quantum (NASDAQ: QBTS) stock jumped 6.9% through 1:10 p.m. ET Friday after BMO Capital analyst Harsh Kumar initiated coverage of the quantum computing stock with an outperform rating. Considering that Kumar predicted that D-Wave stock would nearly double over the next year, and hit $35, that's not surprising -- but here's something that is surprising: D-Wave rival Rigetti Computing (NASDAQ: RGTI) stock shot up 9.6% today.
And Kumar didn't mention Rigetti at all!
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Why BMO loves D-Wave Quantum
In his note this morning, Kumar said D-Wave stock is "best positioned in the quantum space to have commercial success" based on its two-pronged approach to quantum computing, which explores both annealing and gate models to reach accurate conclusions.
Now, Kumar may be right about D-Wave being the "best" quantum stock. This wouldn't necessarily make Rigetti a bad quantum stock -- just not quite as good as D-Wave. In that case, while Rigetti stock rising some today on general enthusiasm for quantum stocks might make sense, it makes no sense for Rigetti stock to be going up more than D-Wave!
D-Wave is better than Rigetti stock
Consider, too, that while both companies are unprofitable (and likely to remain so for years), Rigetti is in a more vulnerable financial position than D-Wave in the near term. With only $394 million in cash, Rigetti is likely to run out of cash by 2030, according to analyst forecasts of future cash burn. D-Wave, with a cash war chest of $546 million, probably has enough cash to last through 2031 or so before needing to raise more.
On its own, this may not be the strongest argument for buying D-Wave. ("It's unprofitable and burning cash.") It's certainly an argument for preferring it over Rigetti, however.
Should you buy stock in D-Wave Quantum right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
