Palantir Stock: Price Slumps 11% As Q3 Earnings Disappoint Investors
November 10 2022 - 4:47PM
Finscreener.org
Shares of technology
company Palantir (NYSE:
PLTR) fell more than 11% on November 7, 2022, after
it announced Q3 results a day earlier. In Q3, it reported revenue
of $478 million and adjusted earnings of $0.01 per share.
Comparatively, analysts forecast revenue at $470.3 million and
earnings at $0.02 per share.
In the year-ago period, Palantir
reported revenue of $392 million and adjusted earnings of $0.04 per
share. We can see PLTR stock fell on the back of its missed
earnings in the September quarter.
The company forecasted revenue
between $508 million and $510 million in Q4, compared to estimates
of $502.68 million. Let’s see what impacted Palantir’s sales in the
most recent quarter and what’s next for investors.
Palantir is a high-growth tech stock
Palantir builds and deploys
software platforms for the intelligence community in the United
States and other international markets. These tools assist
organizations in counter-terrorism investigations and related
operations.
The company offers the Palantir
Gotham, a platform where users can identify patterns hidden within
datasets helping users and analysts to respond to threats
effectively. Another robust platform is the Palantir Foundry which
aims to change the way organizations operate by creating a central
system for data that can be integrated and analyzed in a single
place.
In Q3 of 2022, Palantir increased
sales by 22% year over year while revenue originating from the
United States surged 31%. Its commercial customers in the U.S.
increased top-line by 53% while government sales in the country
grew 23%.
While the U.S. continues to drive
sales for the company, its international revenue is lagging by a
significant margin in Q3 of 2022.
Palantir went public a little
over two years ago, and it increased sales by 47% year over year to
$1.09 billion in 2020. Its government sales were up 77% at $610
million, while commercial sales grew 22% to $482 million that year.
Last year, Palantir’s sales surged by another 41% to $1.54 billion.
Here, government sales grew 47% to $897 million, while commercial
sales were up 34% at $645 million.
If we break down the company’s
revenue growth further, you will see that commercial business sales
grew at a faster pace compared to the government business in the
last six months of 2021, and this trend has continued in 2022 as
well.
Palantir ended Q3 with a total
contract value of $1.3 billion, which provides investors with
significant visibility in terms of sales. Its customer count also
surged by 66% year over year, while the customer count in the U.S.
more than doubled to 132 by the end of Q3.
What next for PLTR stock price and
investors?
Palantir’s growth of its
commercial business is quite encouraging as it will diversify its
revenue base and reduce long-term dependence on public sector
contracts that can be quite rigid. On the flip side, analysts
believe government agencies in the United States are developing
proprietary tools which will reduce dependency on
Palantir.
In its S-1 filing, Palantir
claimed it aims to become the “default operating system for data
across the U.S. government.”
Valued at a market cap of $14.5
billion, Palantir stock is trading 82% below all-time highs.
Analysts tracking the company expect sales to rise by 22.5% to $1.9
billion in 2022 and by 24.8% to $2.36 billion in 2023. Its adjusted
earnings are forecast to rise by $0.13 per share in 2021 to $0.19
per share in 2023.
PLTR stock is priced at 6.14x
forward sales and 37x forward earnings, which is still quite steep.
Despite the lofty valuation, Palantir is trading at a discount of
almost 30% compared to consensus price target estimates.
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