Palantir Stock Earnings: PLTR tanks day after in-line results fail to impress
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- Palantir stock loses ground after reporting Q2 earnings.
- Results were in-line with Wall Street consensus but showed slow growth.
- CEO Alex Karp announced a $1 billion buyback program.
- If PLTR stock breaks below $17, then $13.56 is back in business.
Palantir (PLTR) stock plunged more than 9% at Tuesday's open following quarterly results following the previous session. PLTR stock is trading $1.50 lower near $16.50 at the time of writing. Late Monday, Palantir announced second-quarter earnings that came in precisely in-line with Wall Street consensus. Despite the added benefit of a $1 billion buyback scheme, PLTR pulled back immediately.
Part of the negativity follows headlines that Moody’s has downgraded a number of major US banks due to worries over near-term profitability during a time of higher interest rates and a hurting commercial real estate sector. The Dow, S&P 500 and NASDAQ Composite all sold off around 1% at the start of Tuesday's session.
Palantir stock earnings: Decent, but worth 19 times sales?
It may finally be dawning on investors that Palantir’s level of growth is out of step with its high valuation. Revenue of $533 million in the quarter places Palantir on the road to a full-year sales figure circa $2.2 billion. But with a $38 billion market cap, this means the AI-leveraged data company trades at 18 to 19 times sales.
Revenue in the second quarter grew slightly below 13% YoY – hardly in the realm of top-tier growth stocks. Adjusted earnings per share (EPS) of $0.05 matched consensus perfectly, and Palantir once again (same as Q1) earnings $0.01 in GAAP EPS.
“We still have immense opportunity for growth, both through expansion within these industries and growth in our existing customer relationships,” said CEO Alex Karp. “For example, we’re beginning to see this growth come to fruition in both healthcare and transportation, which grew 93% and 129% YoY, respectively.”
The company announced a $1 billion buyback program that will run for the next year. Of course, it may seem strange to repurchase shares now that the share price has run up 181% year to date. But if the share price decline in the second half of the year, the buyback program might retire about 3% of shares outstanding. Long-term, this would be quite good for shareholders.
Palantir’s separate accounting for government and commercial contracts showed a strong divergence in the quarter. As it concerns government contracting, Palantir saw growth from foreign governments far outstrip growth in its more mature relationships with US government agencies. Its commercial platform, however, flipped this relationship on its head as US corporations grew Palantir’s revenue at about twice the rate of its foreign commercial segment.
Palantir’s overall commercial revenue grew 10% YoY to $232 million, whereas US commercial revenue grew 20% from a year ago to $103 million. Overall, government revenue grew 15% YoY to $302 million, while foreign government revenue gained 31% YoY to $76 million.
Palantir grew its customer count by 38% YoY to 161 total partners.
Palantir stock forecast: Consolidation back to $13.56 likely
Palantir stock dropped below the 9-day Simple Moving Average (SMA) on Monday but recouped much of its losses by the close. PLTR bounced higher mid-session off the $17 bespoke resistance-turned-support level from June.
The post-market and premarket collapse in the Palantir stock price is once again flirting with lower values, however, on Tuesday. Part of Tuesday's premarket was spent down near $17.30.
A break of the $17 level and the 30-day moving average at $16.75 would send the share price tumbling back to the June 23 support of $13.56. With the Relative Strength Index (RSI) correctly dropping from overbought territory to its current reading near 55, this type of consolidation seems fairly likely.
PLTR daily chart
