Rigetti Computing (NASDAQ:RGTI) saw its stock plummet 5.03% in night session trading on Tuesday, extending its recent downward trend amid mounting challenges in the quantum computing sector. The sharp decline follows an analyst downgrade and broader industry concerns, putting pressure on the stock that had previously seen significant gains this year.

The sell-off was primarily triggered by a downgrade from B. Riley Securities analyst Craig Ellis, who lowered Rigetti's rating to Neutral from Buy. Despite raising the price target to $42 from $35, Ellis cited valuation concerns following the stock's impressive 156% year-to-date gain. The analyst noted that a "significant percentage of long-term commercial success" is already reflected in the current stock price, prompting investors to reassess their positions.

Adding to the pressure on Rigetti's stock are concerns about potential delays in U.S. government funding authorizations resulting from the recent federal government shutdown. This is particularly significant for Rigetti, which relies heavily on government contracts. Furthermore, the quantum computing sector as a whole is facing challenges, with peers like D-Wave Quantum and IonQ also experiencing significant drops. The news of rival quantum computing firm Xanadu eyeing a U.S. listing has also intensified competition fears, contributing to the sector-wide retreat and putting additional downward pressure on Rigetti's stock price.