Palantir Falls To A New Low - Is It Poised To Recover?
The Tokenist | May 15, 2022 08:21AM ET
Shares of Palantir Technologies (NYSE:PLTR) crumbled last week after the big data analytics provider reported disappointing fiscal Q1 earnings.
Disappointing Set Of Results/h2
The data analytics company debuted on the New York Stock Exchange (NYSE) under the ticker symbol “PLTR” at $10 per share, above the reference price of $7.25 per share, which would have valued the company at almost $16 billion.
Palantir share price surged 50% above its reference price in just 30 minutes after the debut, closing its first trading day at $9.50, or 31% above the indicated price.
The company went public through a direct listing as opposed to an Initial Public Offering (IPO). This means it did not hire underwriters to evaluate demand and set a price. Instead, companies that go public through a direct listing sell only their existing shares and raise no fresh funding.
On May 11, Palantir stock price hit a fresh record low below $7.00. Shortly after results were released, RBC Capital Markets downgraded PLTR stock to Underperform, indicating it expects shares to trade below the current market price.
The question arises: where did it go wrong for the data analytics company?
Investors seem to be increasingly doubting that Palantir can achieve its mid-term target of 30%+ revenue growth through 2025. The outlook for Q2 indicates a growth of “just” 25% year-over-year.
Another issue for Palantir is the falling margins. The company guided for an adjusted operating margin of 20% in Q2, which is significantly lower than the 31% achieved a year earlier. Increasing investments in salesforce are hurting profits and margins. It shouldn’t be a surprise that Palantir opted to wind down its investment program.
Hence, until Palantir can prove that it can accelerate slowing growth, as well as improve profitability, it is likely that investors will continue to see it as a “show-me” story.
Conclusion/h2
Last week, Palantir shares traded as low as $6.55—marking a new all-time low. While they have started to climb, and are now trading at roughly $8 at the time of writing, Palantir ultimately delivered a disappointing set of results in Q1.
Moreover, the guidance for Q2 revenue is calling for lower-than-expected growth, which only increases the investor pessimism that Palantir can’t deliver on its targets.
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