Missed Earnings or Buying Opportunity?
Earlier this week, data analytics giant Palantir (NYSE:PLTR) delivered its earnings and boy were the markets not impressed. It’s been a tough earnings season in general for companies as ongoing geopolitical tension between Russia and Ukraine, as well as impending interest rate hikes by the Federal Reserve have weighed on the minds of investors. You could say that Palantir’s earnings miss came at the wrong time.
So how bad was the miss? Honestly, there’s been much worse. The company beat analyst estimates on revenue with $433 million compared to consensus estimates of $418 million. It was the lower than expected earnings from Palantir that caught investors off guard. The company reported a wider than expected loss, resulting in earnings per share of $0.02 compared to expectations of $0.04 per share.
Palantir’s revenues came in 26% higher on a year over year basis, and added 34 net new customers during the quarter. Other than a slight miss on earnings, it sounds like a pretty good quarter doesn’t it? On the day of the earnings call, shares of Palantir tumbled by 15.75% and hit an all new 52-week low. It should be noted that this drop also came on a day where the broader markets were well below water, with the NASDAQ falling by 2.82%, the S&P 500 dropping by 2.12%, and the Dow Jones losing 622 basis points. Palantir really had no chance on a day like that.
Palantir Forecasts are Intact
Furthermore, Palantir reiterated that its revenues will still be growing by a 30% CAGR every year through 2025. Palantir has always been a growth stock. Sure, it isn’t as new as other growth companies, but it didn’t really expand into the consumer market until the last couple of years after it went public. It’s difficult to gauge a company’s past performance when the business model has completely changed.
In 2021, Palantir’s consumer revenues jumped by 102% and grew its customers by 470% during the year. Does that really sound like a company that isn’t expanding? Take a deeper dive into Palantir’s financials as CEO Alex Karp noted the company has a war chest of $2.3 billion in cash and other assets, with no debt.
Palantir Stock Forecast 2022
An overreaction is an overreaction, no matter how you frame it. Yes, it’s not great that Palantir missed slightly on its Q4 earnings, but it wouldn’t be the first company to do so. What I’m looking at with Palantir is the long-term, and what Karp and the executive team told me in the earnings call is that its forward-looking thesis is still intact. The stock is trading near its direct listing price now, and it has only grown in size, market, and customer base since that time. Take this as a slight earnings miss in a bad market environment right now. Palantir is on the right path and this is a great discount for a high growth company.
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