Palantir Technologies (PLTR) beat some expectations, and met the rest. That may be precisely the point.
Palantir (PLTR) left analysts puzzling over why the stock sank more than 12% after posting impressive quarterly earnings. Some claim that investors found the company’s annual revenue forecast disappointing. Others are pointing to growth issues outside of the U.S.
Revenue Guidance
There is a clash of cultures involving Palantir. Their guidance is conservative; investors are champing at the bit, especially when it comes to AI-heavy companies. Never mind that Palantir raised its revenue growth from 40% to 45% for the year; it isn’t enough. The fact that full-year revenue is expected between $ 2.677 and $2.689 billion is still below the $2.71 billion that investors seem to expect.
There are some concerns that the company’s focus on the U.S. market will come to haunt it if/when the American economy falters. Palantir CEO said in his Q1 2024 letter to investors that,
“We anticipate that our U.S. commercial business, which accounted for 24% of our revenue last quarter, will remain one of the most significant drivers of our growth in the near term.”
No comments have been made about Palantir’s U.S. government business, which has also been doing well.
Technicalities
From a technical perspective, there are a few bumps, and some of those seem to have disturbed investors. Motley Fool points out that Palantir is expensive from most perspectives, as it sells at 66x forward earnings and 15x forward sales. These numbers don’t tell the whole story, as the growth rate needs to be taken into consideration. Doing that brings a price/earnings-to-growth ratio typically seen for undervalued stocks.
Stock price
PLTR hit a six-month low of 15.98 on January 5, but the last two months have been good to Palantir. In particular, PLTR rose from 20.47 on April 19 to 25.44 on May 6. This latter climb has made some investors nervous. It could be that the currently seen gains are already factored into the current price.
About Palantir
Palantir Technologies has embraced Artificial Intelligence after being founded as a data mining firm with a focus on government and numbers-hungry corporations. For more on PLTR, see our earlier coverage here.
