Rigetti Computing (NASDAQ:RGTI), a quantum computing company, is set to report its earnings on Wednesday, March 5. The technology sector has encountered significant volatility, with RGTI stock plummeting more than 20% over the past five trading days. Notably, industry heavyweight Nvidia has also experienced a sharp 12% decline during the same period. These declines are symptomatic of a broader market sell-off triggered by President Trump’s tariff announcements. On Monday, March 3, this market turbulence culminated in the Dow Jones falling 1.8% and the S&P 500 dropping 2.1%, representing the index’s most substantial single-day retreat in the current year. Our take on market crash risk right now has more details on how tariffs could impact the broader markets.
Rigetti Computing has $1.5 Bil in current market capitalization. Revenue over the last twelve months was $12 Mil, and it was operationally loss-making with $-67 Mil in operating losses and net income of $-61 Mil.
While the post-earnings stock reaction will depend on how the results and outlook stack up against investor expectations, a detailed look at historical results can aid you if you are an event-driven trader. Here is how – either understand the historical odds and position yourself prior to the earnings announcement, or look at the correlation between immediate return and medium-term return post earnings and take a trade one-day after the announcement.
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Rigetti Computing’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post earnings returns:
- In the past 3 years, 13 earnings data points recorded, with 6 positive and 7 negative one-day (1D) returns observed. In summary, positive 1D returns seen about 46% of the time.
- The percentage has remained the same at 46% if we consider last 3 year data instead of 5.
- Median of the 6 positive returns = 7.4%, and median of the 7 negative returns =-5.4%
Additional data for observed returns 5-days (5D), and 30-days (30D) post earnings are summarized along with the statistics, in the table below.
Correlation Between 1D, 5D, and 30D Historical Returns
A relatively less risky strategy (though not useful if correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has highest correlation and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 3-year (more recent) history. Note that the correlation 1D_5D refers to correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock-reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on past post-earnings performance of Rigetti Computing stock compared with stock performance of peers that reported earnings just prior to Rigetti Computing. For fair comparison, peer stock returns also represent post-earnings one day (1D) return.
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