There’s a school of thought that artificial intelligence and cybersecurity are a winning combination for a company to thrive in 2021. But Palantir Technologies (NYSE:PLTR) has defied that way of thinking as of late. PLTR stock has been a major disappointment for investors so far this year.
Since hitting an all-time high of $45 in late January, shares of the big data analytics company are down roughly 57%. In the past month alone, PLTR stock is down nearly 28%.
That includes the post-earnings sell-off following the company’s third-quarter report, despite Palantir beating revenue expectations and delivering a strong outlook for the current quarter.
Can PLTR stock turn its fortunes around in 2022? Let’s take a closer look.
Palantir at a Glance
Founded by Peter Thiel in 2003, Palantir Technologies went public via a direct listing in September 2020 and currently has a market cap of $38.8 billion. The company is headquartered in Denver and actually gets its name from J. R. R. Tolkien’s The Lord of the Rings series. “Palantiri” were magical and indestructible crystal balls that were used to communicate and see other parts of that fabled world.
What Palantir does isn’t magical, but it is pretty cool. Palantir’s software allows government and private sector businesses to analyze and manage massive amounts of data, detecting meaningful patterns and connections. Its data sets are considered to be highly secure compared to its peers, which is why the company is sometimes considered a cybersecurity play.
Some of Palantir’s first clients were U.S. intelligence agencies and the Pentagon. Over the past few years, the company has been growing its client base to include private firms, other federal agencies, and some state and local governments. For example, the U.S. Department of Health and Human Services uses Palantir software to track vaccine distribution.
Palantir Delivers a Strong Q3 Earnings Report
The company’s third-quarter earnings report should have been a positive for PLTR stock. Palantir posted $392 million in revenue, while analysts had expected only $385 million. Earnings of 4 cents per share met expectations.
Revenue was up 36% from the same quarter a year ago. However, some investors may have been disappointed as the previous two quarters saw 49% year-over-year growth.
For the fourth quarter, management expects revenue to increase 30% to $418 million, which was ahead of the consensus estimate of $402 million. Palantir projects full-year revenue of $1.53 billion, which would be a year-over-year increase of 40%. Through 2025, management believes it can grow revenue at least 30% annually.
The company used its earnings call to promote its new platform, Apollo, which it described as a new continuous delivery system that brings software-as-a-service (SaaS) management to its platforms. COO Shyam Sankar stated:
Once again, we are building five years ahead of the market, software shamans building technology that will meet its moment. With our latest investments, you will be able to develop streaming pipelines in Foundry that you then package up, version, and continuously deploy to Edge compute infrastructure, be it a Humvee, a satellite, a 5G base station to enable real-time processing of large amounts of data in a decentralized efficient manner. These pipelines, they’ll be versioned, upgrade, managed, and orchestrated by Apollo.
Despite the revenue beat and the promotion of the Apollo platform, PLTR stock fell by more than 9% immediately after the earnings report. And it has continued lower ever since. Some of that slide can be attributed to the market’s drag on tech stocks. But investors also appear concerned that Palantir is seeing slower growth.
Keep an Eye on Recent Announcements
While growth is slowing, investors should be cheered by a series of announcements that came out recently. These include:
- Palantir and Merck KGaA announced a partnership to address the global semiconductor shortage. The companies are developing an AI-infused platform that will help firms navigate the supply chain and reduce time to market.
- Palantir and Babylon Holdings (NYSE:BBLN) announced “substantial progress” on their work to use data to improve clinical care for Babylon’s healthcare clients.
- Palantir won a $43 million federal government contract with the Space Command’s Cross-Mission Ground & Communications Enterprise.
- Palantir and Kinder Morgan (NYSE:KMI) announced a multi-year deal in which Kinder Morgan will use Palantir’s platform to support its infrastructure and improve data analysis, grid integrity and pricing.
And those are just the announcements from the past week or so. I expect similar headlines to continue to roll in.
The Bottom Line on PLTR Stock
PLTR stock made a huge run higher into early January but has been struggling ever since. However, if you’re looking for a long-term cybersecurity and AI play, this is a solid pick. You’ll just have to be patient.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.