Palantir Technologies Stock Soars After Impressive Q3 Earnings and Robust Guidance

Palantir Technologies (NYSE: PLTR) has seen its stock surge significantly following the release of its third-quarter earnings report on November 4, 2024. The company reported revenue of $726 million, a 30% increase from the same period last year, and adjusted earnings of $0.10 per share, a 43% increase. These figures exceeded analysts’ expectations of $703.4 million in revenue and $0.09 per share in earnings[2][5].

The strong performance led to a 23% increase in the stock price the day after the earnings were announced. This marks the eighth consecutive quarter where Palantir has surpassed both top- and bottom-line expectations. CEO Alex Karp described the quarter as one where the company “absolutely eviscerated” its targets[3][5].

Palantir also raised its 2024 revenue forecast to just over $2.8 billion, up from the previous estimate of $2.75 billion, indicating a year-over-year growth of nearly 26%. This growth is driven by a solid contract pipeline, with the company’s remaining deal value (RDV) increasing by 22% year-over-year to $4.5 billion[2][5].

Despite the impressive growth, some investors are cautioning against the stock’s high valuation. Palantir is trading at 46 times sales and has a price-to-earnings multiple of 255, significantly higher than the U.S. technology sector averages. Top investor Victor Dergunov, while optimistic about Palantir’s long-term potential, advises against chasing the stock at its current price, suggesting it is “priced for perfection”[3][5].

The company’s operating margin jumped by 9 percentage points to 38% in the third quarter, and consensus estimates project Palantir’s earnings to increase at an annual rate of 59% over the next five years. The forward price/earnings-to-growth ratio (PEG ratio) of 0.42 suggests that the stock may be undervalued relative to its growth potential[2][5].

Palantir’s strong position in the AI software platforms market, which is expected to see 40% annual growth through 2028, further supports its potential for continued growth. However, analysts have mixed views, with a consensus rating of “Hold” and a 12-month average price target of $34.30, indicating a potential downside of 41% from current levels[3][6].