PLTR stock actually dropped 4.3% in after-hours trading on Monday even as Palantir Technologies posted some pretty impressive third-quarter results. The company reported $1.18 billion in revenue along with adjusted earnings of 21 cents per share, which beat Wall Street expectations of $1.1 billion and 17 cents. The PLTR stock price initially jumped around 7% before it gave up those gains, and this shows how elevated valuations can sometimes overshadow even strong performance in the current market environment.
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AI Growth Powers Palantir Earnings and Lifts PLTR Stock Outlook
Record Results Beat Wall Street Forecasts
Revenue was reported to have surged 63% year over year, with U.S. commercial sales actually jumping 121% in the quarter. Net income more than tripled to $475.6 million from $143.5 million a year earlier, and this Palantir stock earnings report also showed that total contract value for U.S. commercial deals more than quadrupled to $1.31 billion. Ryan Taylor, who serves as Palantir’s chief revenue and legal officer, mentioned to MarketWatch that the platform is delivering transformational impact right now.
David Glazer, Palantir’s chief financial officer and treasurer, told MarketWatch that this was actually the fourth consecutive quarter where the U.S. commercial business exceeded the government segment.
Why PLTR Stock Disappointed Despite Strong Palantir Earnings
Jake Behan, head of capital markets at Direxion, explained the situation:
“As we have seen thus far this earnings season, earnings beats aren’t necessarily being rewarded owing to extended positioning and lofty expectations already baked into price. At this valuation, even great numbers don’t move the needle. The bar is sky high and not an easy one to clear, even for Palantir.”
The PLTR stock trades at a forward price-to-earnings ratio of 253 times at the time of writing, according to FactSet data. Only 24% of analysts who cover Palantir actually assign the stock a buy or buy-equivalent rating. Palantir stock news shows that shares have surged more than 170% this year, which has lifted the market cap past $490 billion.
Citi analyst Tyler Radke had questioned whether Palantir could surpass the high expectations that were set by last quarter’s results, which saw the company crossing $1 billion in quarterly revenue for the first time.
Strong Guidance Reflects Continued Growth
Palantir raised its full-year guidance to approximately $4.40 billion in revenues, up from the previous $4.14 billion to $4.15 billion range. The company also bumped up its full-year free cash flow outlook to somewhere between $1.9 billion and $2.1 billion. For the fourth quarter, PLTR stock price expectations include revenue of about $1.33 billion, which exceeds analyst forecasts of $1.19 billion.
Palantir’s government sales grew 52% to $486 million, while a recent $10 billion deal with the U.S. Army boosts the company’s stock performance. CEO Alex Karp emphasized retail investor support when he spoke to MarketWatch, stating that average Americans are now the most excited about the company’s results.
In a shareholder letter, Karp wrote:
“The reality is that Palantir has made it possible for retail investors to achieve rates of return previously limited to the most successful venture capitalists in Palo Alto. And we have done so through authentic and substantive growth.”
Karp also told CNBC’s Morgan Brennan that strong companies will get much stronger, while companies that are just pretending will disappear quickly.
The Palantir stock earnings report demonstrates that AI-driven demand continues to drive business momentum, even as valuation concerns persist among some analysts. Shares closed Monday above $207, after opening at $10 when the company conducted its 2020 direct listing.
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