Palantir Stock Continues To Bleed, Here’s Why!

which supplies big data analytics software to the government and large companies, posted its third-quarter earnings on Tuesday that surpassed the revenue expectations of the analysts and matched earnings estimates.

The Earnings Per Share for the quarter ended September 30, 2021, stood at 4 cents adjusted against the expected 4 cents, according to Refinitiv.

Revenue for the reporting quarter came in at $392 million, up 36% YOY and $7 million above the estimated $385 million, according to Refinitiv.

Year-To-Date, total revenue saw a rise of 44% year-over-year to $1.1 billion. Palantir said, for the fourth quarter, the company expects the revenue to come in handy at $418 million, exceeding current Refinitiv estimates of $402 million. For the full year, it sees revenue growth of 40% to $1.527 billion. It also reiterated that it anticipates annual revenue growth of 30% or more through 2025.

Palantir, which was founded by tech investors– Peter Thiel, Joe Lonsdale, CEO Alex Karp, Nathan Gettings and Stephen Cohen in 2003, has its business focused on providing big data analytics software to government agencies. Some of its important clients include the Department of Defense. In recent years, Palantir has tried to diversify its business, and experienced a rise in demand for its technology during the Covid outbreak, as governments tried to sort through massive amounts of health data. In July, the Department of Health and Human Services renewed its agreement with Palantir so that it can keep a record of vaccine distribution.

Palantir debuted on New York Stock Exchange in September 2020, and as of the market close of November 10, the company had a market cap of $45 Billion.

Shares of Palantir fell 9.35% on Tuesday, marking the market close at $24.25 per share from its previous close of $26.26. The stock has continued to bleed, even on Wednesday, as earlier in pre-market trade the stock plummeted more than 3%, registering its pre-market low of $23.5. It opened its intraday at $23.60 apiece.

The extended fall comes after RBC Capital Markets analyst Rishi Jaluria downgraded the stock, warning of “cracks emerging in the story.”

“We believe Palantir got direct benefits from COVID-related spending and those benefits have already faded,” Jaluria wrote in his note to clients, lowering its price target to $19 from $25.

“Government, to us, is the strongest part of Palantir’s business and while we expected a deceleration, the growth rate was nearly cut in half from Q2 to Q3,” he said in a report.

The impact of the announcement could be observed on the dashboard of Quantale as the social engagement for the stock amongst the users of Twitter and Reddit rose more than 200% from its previous day combined with an increase of more than 84% in the trading volume.

Palantir

During the reporting quarter, the U.S. commercial revenue of the company rose 103% year over year and its commercial customer count increased 46% from the second quarter, Palantir said in a statement.

Dave Glazer — Chief Financial Officer, in an earnings call conference with analysts said that the revenue from government revenue rose to 34% as it signed new deals with the Air Force, HHS and NIH. Also, the company was down-selected by the US Army to provide its Intelligence Data Fabric and Analytics solution under CD-2.

“In the third quarter, we closed 54 deals of $1 million or more in total contract value, including 33 deals of $5 million or more and 18 deals of $10 million or more. Third-quarter billings increased 56% year over year and the remaining performance obligation increased 172% year over year as we continue to improve contracting, push out or remove termination for convenience clauses and move to shorter duration billing cycles. Total remaining deal value increased 50% year over year to $3.6 billion, with commercial remaining deal value increasing 101%”, said Glazer.

Third-quarter income from operations, excluding stock-based compensation and related employer payroll taxes stood at $116 million, representing an adjusted operating margin of 30%. For the fourth consecutive quarter, the company posted an adjusted operating margin at or above 30%.

In the third quarter, adjusted expenses summed at $276 million, up 2% year over year. The bulk of expense growth is due to continued investments in product development and sales to support durable long-term growth.

Marketing expenses grew 144% QOQ as the company put in consistent efforts to fuel demand generation.