Palantir Technologies began trading in September on the NYSE.
Michael Nagle/Bloomberg
Palantir Technologies shares snapped their six-day losing streak with a sharp rebound rally on Friday. The always-volatile stock had fallen more than 30% in six days, dragged down by disappointment with the company’s fourth-quarter financial results and the recent expiration of its post-IPO lockup period for investors.
The Wall Street Journal’s Heard on the Street column points out on Friday that the stock has been embraced by the Reddit WallStreetBets crowd, the same group of individual investors that drove GameStop shares (ticker: GME) parabolically higher last month.
On Tuesday, Palantir (PLTR) posted revenue of $322 million for the December quarter, up 40% from a year ago and well ahead of the Street consensus at $300.7 million. The company reported a non-GAAP profit of six cents a share, ahead of the Street consensus at two cents. On a GAAP basis, the company lost eight cents a share. Palantir said revenue from government customers was $190 million, up 85% from a year earlier, while commercial revenue was $132 million, up just 4%
The big-data analytics company said it expects 45% revenue growth for the first quarter. Palantir continues to expect revenue growth of better than 30% for the full year, and it announced a new goal of revenue above $4 billion for 2025.
Street reaction to the results was mixed. As reported on Wednesday, the stock was upgraded post-earnings by Goldman Sachs to Buy from Neutral, with a new price target of $34, while William Blair went to Underperform from Market Perform, asserting that the stock doesn’t sufficiently price in risks. Citigroup analyst Tyler Radke repeated his Sell rating and $15 target, asserting that “the stock is overvalued considering the narrowing of growth drivers and increased quality issues with higher government exposure.”
Credit Suisse analyst Brad Zelnick this week repeated his Underperform rating, setting a price target of $20. He wrote in a research note that the fact that the company beat estimates for the quarter but didn’t boost 2021 guidance “leaves lingering questions about the potential magnitude of second half growth deceleration.” And he adds that the lack of full-year margin guidance “calls into question the sustainability of recent margin expansion as Covid related savings come back [like many IT services companies, the company reduced travel spending during the pandemic] and the company invests aggressively in direct sales.”
Trading activity in this stock has soared this week ahead of Thursday’s lockup expiration. Almost 308 million shares traded on Thursday, the highest total ever aside from the stock’s listing day last Sept. 30, when 339 million shares changed hands. Friday will be the fourth day in a row with trading of at least 149 million shares.
Palantir shares opened for trading last year at $10. The stock in recent weeks has been highly volatile, trading as high as $45 on an intraday basis on Jan. 27. After closing at $38.17 on Feb. 9, the stock went into a six-day tailspin before today’s recovery rally. On Friday, Palantir shares are up about 13%, at $28.37. At that level, the company has a valuation of about $53.5 billion, or roughly 36 times consensus Street revenue estimates for 2021.
Write to Eric J. Savitz at [email protected]
