Palantir Technologies just posted the best quarter in its history — and Wall Street yawned. The software company booked its first-ever quarter with more than $2 billion in revenue, nearly double the year-earlier total, yet the stock slipped 3% in after-hours trading on November 2. Here’s what spooked investors.
Palantir (Credits: MarketWatch / Morningstar)
Palantir’s Bombastic Quarter Wasn’t Enough for the Stock
The headline numbers were undeniably strong. CEO Alex Karp called the company’s growth “bombastic,” and adjusted free cash flow came in at $1.216 billion — a 53% margin on revenue. It was also the first quarter where U.S. commercial sales topped U.S. government sales.
So why did shares fall? Analysts point to a deceleration in U.S. commercial-contract growth. Palantir closed $1.46 billion of U.S. commercial deals, up 11% from a year prior — but that was far below the 153% growth recorded in the second quarter, and the lowest growth rate since 2023, according to William Blair analyst Louie DiPalma.
Priced to Perfection
The deeper issue, market watchers say, is expectations. “Palantir came into earnings priced to perfection, hence the pullback off the beat,” said Ryan Lee of Direxion, noting that elevated expectations are “the main factor holding back this recent highflyer.” The stock remains off 16% from its October peak, though it’s still up 45% this year.
Still, the bulls have ammunition: this was Palantir’s first $2-billion quarter, free cash flow is soaring, and the commercial business keeps scaling. Whether the stock reaccelerates depends on whether the business keeps outperforming a valuation that leaves almost no room for error.
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Source: MarketWatch — read the full story there.
