While tensions in Ukraine continue to dominate headlines, Q4 earnings results are still a big reason why traders are closely following the markets as well. In recent weeks, we’ve seen how investors have become far more demanding from companies financial results, with even minor earnings slipups leading to massive sell-offs in a company’s stock. One of Thursday’s worst-performing companies was Palantir (NASDAQ: PLTR), whose stock plummeted after its Q4 results missed targets.
The company earned just two cents per share on a total of $432.8 million in revenue. In comparison, analysts were expecting earnings per share to be at least twice that figure, around $0.04. However, revenues were higher than the $418 million Wall Street expected.
During the fourth quarter, Palantir also confirmed it gained 34 new customers and closed over 64 deals worth $1 million or more. Going forward, the company also said it predicts Q1 2022 revenues to reach $443 million, once again edging out over Wall Street’s targets.
Although revenue growth is still appreciated, it’s become a bit out of favor amongst investors right now. With inflation higher than ever and multiple interest rate hikes on the horizon, investors are now looking for companies that are profitable. For that reason, we’re seeing earnings play a much bigger role in satisfying investor expectations than revenue growth. Hence why so many Q4 earnings have led to stock market losses, despite in these cases revenue figures continuing to skyrocket.
Despite skepticism and concern from worried investors, Palantir’s CEO Alex Karp talked about how Palantir is in a strong financial position to weather any economic storm. This includes the company’s massive cash balance and the fact that it remains debt-free while still growing.
“Bad times are very good for Palantir because we build products that are robust, that are built for danger. And then the finances internally are actually built for bad times. And bad times means you have free cash flow, the free cash flow turns into GAAP profit,” said CEO Karp on Thursday in a conference call with analysts and shareholders.
Shares were down over 16.5% following the news and disappointing earnings. Over the past year, Palantir has lost over 53% of its market cap, now trading with a $23.6 billion market cap. While two analysts are bullish, four are neutral, and another four are bearish. While big tech stocks have floundered since the year began, Palantir has enough cash on hand that it’s in a better position than many of its more cash-strapped peers. Whether investors see it that way is another question.
Palantir Technologies Company Profile
Palantir Technologies provides organizations with solutions to manage large disparate data sets in an attempt to gain insight and drive operational outcomes. Founded in 2003, Palantir released its Gotham software platform in 2008, which focuses on the government intelligence and defense sectors. Palantir expanded into various commercial markets with its Foundry software platform in 2016 with the intent of becoming the data operating system for companies and industries. The Denver company had 125 customers as of its initial public offering and roughly splits its revenue between commercial and government customers. – Warrior Trading News
