Palantir (PLTR) Stock Drops Following Strong Q3 Earnings Beat – Here’s Why

TLDR

• Palantir posted Q3 revenue of $1.18 billion, surpassing the $1.09 billion estimate, with earnings of 21 cents per share beating the 17-cent forecast.
• Q4 revenue guidance increased to $1.33 billion versus $1.19 billion expected, while full-year sales outlook rose to $4.4 billion from $4.17 billion.
• U.S. government revenue climbed 52% to $486 million, and U.S. commercial business more than doubled to $397 million.
• Stock fell 4-6% after earnings despite strong results, following a 170% gain year-to-date.
• CEO Alex Karp warned weaker AI competitors will soon disappear as the market matures.

Palantir shares dropped around 4% in after-hours trading and nearly 6% in Frankfurt despite reporting third-quarter results that exceeded Wall Street expectations.

Palantir Technologies Inc., PLTR

The data analytics company delivered revenue of $1.18 billion for the quarter. Analysts had projected $1.09 billion. Adjusted earnings per share reached 21 cents, topping the 17-cent estimate.

Revenue surged 63% from $725.5 million in the prior year period. Net income more than tripled to $475.6 million compared to $143.5 million a year earlier.

The company raised its outlook for both the current quarter and full year. Fourth-quarter revenue is expected to hit $1.33 billion, well above the $1.19 billion consensus.

AI Platform Fuels Commercial Growth

Full-year revenue guidance now stands at $4.4 billion versus the previous estimate of $4.17 billion. Free cash flow projections increased to between $1.9 billion and $2.1 billion.

U.S. government revenue grew 52% year-over-year to $486 million. The company recently landed a contract worth up to $10 billion with the U.S. Army. Military agencies continue to be major customers for Palantir’s analytics platforms.

The ongoing government shutdown, now in its second month, could threaten some contracts. However, government sales remain a key driver of growth.

U.S. commercial business more than doubled to $397 million in the quarter. Total contract value for U.S. commercial deals jumped over fourfold to $1.31 billion.

Market Reaction and Valuation Concerns

Palantir attributes much of this expansion to adoption of its artificial intelligence software platform. Recent partnerships with Snowflake, Lumen, and Nvidia extend the company’s commercial reach.

Palantir shares have rallied over 170% this year. The company’s market cap now exceeds $490 billion, making it one of the world’s most valuable tech firms.

The stock trades at high multiples relative to other large technology companies. Some analysts have raised concerns about the valuation. Karp defended the company’s performance in a shareholder letter, addressing what he called “detractors.”

Other tech stocks also declined in early Frankfurt trading. Nasdaq futures indicated a sharply lower open, down 1.3%. Shares of Meta, Tesla, Alphabet, Amazon, Nvidia, Apple, and Microsoft fell between 0.9% and 2.6%.

Palantir reported adjusted earnings of 21 cents per share on revenue of $1.18 billion, with Q4 guidance set at $1.33 billion and full-year expectations raised to $4.4 billion.

The post Palantir (PLTR) Stock Drops Following Strong Q3 Earnings Beat – Here’s Why appeared first on Blockonomi.