Palantir Stock On Track To Open At Record High Following Beat-And-Raise Q3 But Retail Lose Sleep Over Valuation

Palantir Technologies, Inc. ($PLTR) reported Monday after the market close third quarter earnings and revenue that exceeded estimates and raised its full-year guidance.

Denver, Colorado-based Palantir said its third-quarter non-GAAP earnings per share (EPS) was $0.10 that surpassed the $0.09-per-share consensus and the year-ago’s $0.08. The company also reported a record profit of $144 million.

Revenue climbed 30% year-over-year (YoY) and 6% sequentially to a record $726 million versus the consensus of $705.11 million. The YoY revenue growth has seen acceleration for six straight quarters now, from 13% in the second quarter of 2023.

The U.S. revenue rose 44% YoY and 14% sequentially to $499 million or about 69% of the total revenue. Revenue from the U.S. government rose 40% YoY to $320 million and that from U.S. commercial customers jumped 54% to $179 million. 

“The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand for the most advanced artificial intelligence technologies from our U.S. government and commercial customers,” said CEO Alex Karp in a letter to shareholders.

Palantir ended the quarter with cash, cash-equivalents and short-term U.S. Treasury securities of $4.6 billion. It generated cash from operations of $420 million on a trailing twelve-month basis and adjusted free cash flow of $435 million.

The company said it expects fourth-quarter revenue of $767 million to $771 million and adjusted income from operations of $298 million to $302 million. 

It raised its full-year revenue guidance from $2.74 billion-$2.75 billion to $2.805 billion-$2.809 billion.

Palantir, which is now a S&P 500 component, has seen its shares surge by over 140% so far this year. Its stock is now the third best-performing index component for the year.

As of 5:57 am ET, Palantir shares soared 13.02% to $46.80 in reaction to the stellar earnings report. If the pre-market gains sustain in the regular session, the stock is on track to open at a record high. The previous high was the $45.14 level the stock touched intraday in late-October.

Notwithstanding the buoyant earnings report, the retail crowd remained skeptical. Most Stocktwits users said the stock is overvalued and raised the specter of a correction.

A few see the stock as a good short.

Wall Street, however, threw their weight behind the company. Wedbush analyst Daniel Ives termed the results as “robust,” with beats across the board, helped by accelerating deal momentum. 

Ives maintained an “Outperform” rating and $45 price target for the stock.

“Despite the skeptics honing in on valuation for the past year, this was a major quarter to prove that PLTR’s partner ecosystem expansion and AIP bootcamps hit another gear as more use cases for its entire portfolio meet the rising demand for enterprise-scale generative AI solutions,” Ives said.

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