Defiance ETFs Launches 2X Inverse ETF Targeting Rigetti Computing, Signaling Heightened Volatility

Defiance ETFs Introduces Leveraged Inverse Product for Rigetti Computing

Defiance ETFs officially launched the Defiance Daily Target 2X Short Rigetti Computing ETF (RGTZ) on October 9, 2025. This new exchange-traded fund expands Defiance's portfolio of single-stock leveraged ETFs, offering market participants a mechanism for amplified bearish exposure to Rigetti Computing Inc. (Nasdaq: RGTI), a prominent entity in the quantum computing sector.

Structure and Objective of RGTZ

The RGTZ ETF is engineered to achieve daily inverse investment results, specifically targeting -200% of the daily percentage change in Rigetti Computing's share price, before accounting for fees and expenses. This structure implies that if RGTI's stock value were to decrease by 1% in a single trading day, RGTZ would aim for a 2% increase. Conversely, a 1% rise in RGTI would result in a 2% decline for RGTZ. Crucially, the fund is explicitly designed for short-term use, ideally a single trading day, with its performance over longer periods subject to compounding, which can lead to significant deviations from the stated objective. Investors are warned of high risks, including the potential loss of their entire principal within a single trading day.

Rigetti Computing Inc. operates in the developing field of quantum computing, focusing on the design, development, and provision of integrated quantum computing systems and software. The company aims to deliver Quantum Computing as a Service (QCaaS) for commercial and research applications across diverse industries such as finance and healthcare.

Market Reaction and Underlying Dynamics

On its launch day, October 9, 2025, RGTZ experienced a notable decline, trading down 10.50% by late morning. However, in a seemingly counter-intuitive market response, shares of Rigetti Computing (RGTI) advanced by 2.6% on the same day. This immediate bullish sentiment for RGTI, despite the introduction of a dedicated bearish leveraged instrument, highlights the complex and often speculative nature of the quantum computing market.

Rigetti Computing's stock has recently demonstrated significant volatility, characterized by substantial upward movements. Earlier in October 2025, RGTI achieved an all-time high of $40.63, with its shares climbing 171.02% in the prior month and a staggering 5,340% over the preceding year. This rally has been fueled by a combination of factors, including strategic deals, promising technological advancements such as achieving 99.5% median two-qubit gate fidelity, and a substantial cash position of $571 million following a capital raise. Key partnerships, notably with NVIDIA, have further bolstered investor confidence. For instance, Benchmark analyst David Williams recently reiterated a Buy rating and increased his price target to $50 from $20, citing accelerating momentum in the quantum sector.

Broader Market Implications and Risks

The introduction of RGTZ by Defiance ETFs signifies a continuing trend in the financial landscape towards increasingly specialized and leveraged investment vehicles. These products cater to sophisticated traders seeking to express precise, often short-term, directional views on individual equities, particularly those within high-growth, speculative sectors like quantum computing. While offering amplified exposure without requiring direct short selling, these instruments inherently carry amplified risks.

Despite recent bullish momentum, the underlying financial fundamentals of Rigetti Computing present a stark contrast to its soaring stock price. For Q2 2025, the company reported revenue of just $1.8 million, a 42% year-over-year decrease, with net losses widening to $39.7 million. Its valuation has been described by some analysts as "beyond excessive," trading at over 1,500 times its trailing sales and 450 times its forward revenue. Furthermore, RGTI has sustained consistently negative annual free cash flow and maintains a high short interest of 16.21% of its float. The Securities and Exchange Commission (SEC) has consistently warned that leveraged and inverse ETFs are not suitable for all investors, emphasizing their daily rebalancing mechanism and the potential for significant losses over periods longer than a single day, especially in volatile markets.

Analyst Perspectives and Outlook

Analysts note that Rigetti Computing's extraordinary valuation is largely predicated on speculative hopes for future technological breakthroughs rather than current profitability, rendering the stock highly susceptible to volatility. The emergence of a 2X short ETF against Rigetti suggests a market segment exists that anticipates potential downside, possibly due to perceived overvaluation or the long-term horizon for commercializing quantum technology. The general consensus for leveraged ETFs is that they are complex products best suited for knowledgeable investors who actively monitor their portfolios and understand the magnified risks involved.

Looking ahead, the quantum computing sector is expected to remain a hotbed of innovation and speculation. Investors will closely monitor Rigetti Computing's progress on its technological roadmap, its ability to secure further commercial and government contracts, and any improvements in its financial performance. Concurrently, regulatory bodies may increase scrutiny on the proliferation and structure of highly leveraged single-stock ETFs, particularly as issuers continue to push the boundaries of such products.