Here’s What Yesterday’s Earnings Mean for Palantir Stock Investors

PLTR stock - Here’s What Yesterday’s Earnings Mean for Palantir Stock Investors

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Palantir Technologies (NYSE:PLTR) stock plunged 21.31% making a new 52-week low of $7.32 closing at $7.46 on May 9. This steep selloff was fueled by a  heavy volume of nearly 3.5 times the average daily volume. The reason for this selloff was the first-quarter 2022 earnings announcement. Were these Q1 2022 earnings that bad?

Shares of Palantir Technologies have losses of 61% year-to-date, and the question is can PLTR stock go even lower now? I believe that the bottom for the stock will not be easy to form for the following reasons.

Palantir in Q1 2022 reported EPS GAAP of -$0.05, a miss by -$0.02, and revenue of $446.36 million, a beat by $2.85 million.

That is a mixed earnings report and for sure there has been positive news such as total revenue growth of 31% year-over-year to $446 million, US commercial revenue growth of 136% year-over-year, and commercial revenue growth of 54% year-over-year.

However, focusing on the fact that customer count grew 86% year-over-year, Palantir struggles to make a profit yet. The firm reported a loss from operations of $(39) million and a net loss of $(101.37) million.

In a year during which the stock market has been weak not only due to geopolitical concerns but also due to valuation worries with rising interest rates, Palantir has disappointed investors in multiple ways.

First government revenue increased 16% to $241.7 million, but it missed the estimates of $251 million. This is too important as government revenue in Q1 2022 represented 54.1% of total revenue.

Palantir drives a very significant percentage of total revenue from its government revenue. Year-over-year the 16% increase in government revenue was too far below the 83% year-on-year revenue growth reported for the business segment in the same quarter last year.

This is not good news for Palantir. Another reason for the selloff was the weak Q2 revenue forecast. “Palantir forecast revenue of $470 million. Analysts polled by FactSet had projected second-quarter revenue of $483.7 million.”

A quick reference to one of my previous articles on Palantir is useful to ask again the main question. When will the profitability occur for Palantir?

Missing on EPS and providing a weak revenue forecast when net losses persist do not build a bullish scenario now for a rebound of Palantir stock, even after a 60% decline in 2022. Further volatility and selling pressure should be expected for PLTR stock.

On the date of publication, Stavros Georgiadis, CFA  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.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.


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