Rigetti Computing Inc. - RGTI
With the Founder jumping ship, can RGTI survive?
Earlier this morning quantum computing company RGTI announced the resignation of their Founder, CEO, and President, Chad Rigetti, effective December 15th; this announcement comes only a week after he announced that he would be simply transitioning from his CEO role to other duties (now they are wishing him well in “his next endeavor”). This also comes less than a year after coming public through a merger with a SPAC, and RGTI shares are now down over 80% from my comments at the end of May.
The company also filed an addendum to a few prospectuses that they have been keeping fresh; 500K shares related to warrants belonging to Ampere Computing, an early investor; 23.6M shares on behalf of B. Riley Principal Capital; and 19.3.M shares upon the exercised of some warrants, 96.9M shares of stock from some pre-SPAC investors, and 4.45M warrants going to Supernova Sponsor (the early SPAC) for $2 a share.
At the end of June, this disaster still had around $184M of cash on the balance sheet, though when you subtract some debt and liabilities, it’s probably closer to $150M. They seemed to be burning around $6M a month, so at the end of October that number was likely closer to $125M. If you fully dilute everything outstanding from warrants in the money to options, they should have somewhere in the neighborhood of 150M or so shares.
If the company were to do the right thing, they would immediately fold the company and return anything left over to shareholders, which wouldn’t be much, but at least something. The Founder departing before a company even comes up with a coherent business plan is never a good sign; combined with an expensive search for his replacement, a tech market in panic mode, and uncertainty over future financing, and there will unlikely be many qualified candidates. The company will be forced to raise cash within the next year at some pretty exorbitant and dilutive rates, all while early investors get ready to sell once their shares unlock. Better to fold the entire thing and just walk away.