Stock splits are a strategic tool employed by companies to modify their share prices and outstanding share counts. This financial maneuver can often bewilder investors, as it results in changes to a company’s stock price and the number of shares available. An investor who misses the announcement of a stock split may wake up to a significantly altered share price, mistakenly believing that a major event has impacted the stock. However, it is crucial to understand that stock splits do not affect the overall value of a company or an investor’s equity position.
Rigetti Computing has surged in prominence as one of the leading quantum computing stocks over recent years, a sector viewed by many as a potential game-changer in technology. Speculation is rife regarding the possibility of a stock split for Rigetti Computing, and it’s worth examining the reasons behind such decisions.
Companies may choose to conduct either forward stock splits or reverse stock splits. A forward split increases the number of shares outstanding while lowering the share price, making the stock appear more affordable to retail investors. For instance, if an investor owned 400 shares priced at $1,000 each, totaling $400,000 equity, a 4-for-1 stock split would grant the investor 1,600 shares priced at $250 each, but the total equity would remain unchanged at $400,000. This approach is frequently adopted after a stock has experienced a significant gain to boost liquidity and broaden investor reach.
In contrast, reverse stock splits achieve the opposite effect by consolidating shares, thereby hiking the share price and reducing the overall outstanding shares. Companies might resort to reverse splits if their stock prices lag behind competitors or to avert delisting notices from major exchanges like the New York Stock Exchange or Nasdaq, which issue warnings to companies trading below $1 per share for an extended period. A reverse split can offer a temporary fix for a company aiming to improve its market perception and maintain its listing.
Given its recent performance, Rigetti Computing stands out among a select group of pure-play quantum computing stocks, having seen its share price soar approximately 3,200% since October 2024, despite considerable volatility. Quantum computers represent an evolutionary leap from traditional computing, leveraging the principles of qubits—units of quantum information that allow for advanced data processing capabilities.
As of this writing, Rigetti’s shares trade at about $25 each, positioning them as relatively accessible to retail investors. The company’s market capitalization is around $8.3 billion, with a day’s trading range between $24.52 and $25.27. Recently, Rigetti announced achieving a 99.5% median 2-qubit gate fidelity on its 36-qubit system, a benchmark for high precision in the industry. The firm is also progressing towards developing a qubit system with a minimum of 100 qubits, which would enhance its computational power.
Despite the stock trading at a premium valuation as investors speculate on Rigetti’s potential for commercialization in the quantum computing market, the company currently complies with Nasdaq requirements. The majority of its shares are publicly traded, making a reverse split unlikely in the short term. For the foreseeable future, analysts do not anticipate any stock splits for Rigetti, given that the stock would need to fall considerably before such an action would be warranted.
