Palantir (PLTR) Stock: Strong Earnings Fail to Stop 12% Decline

TLDR

• Palantir stock fell 12% in five days after Q3 earnings despite beating estimates with $1.18 billion revenue and $0.21 EPS.
• Michael Burry disclosed put options on 5 million shares, sparking selling pressure after the earnings release.
• U.S. commercial revenue surged 121% while total contract value jumped 151% to $2.76 billion.
• The stock trades at a 110 forward price-to-sales ratio, raising concerns about valuation sustainability.
• Analysts maintain Hold ratings with an average price target of $187.87, implying 7% downside from current levels.

Palantir Technologies delivered impressive third-quarter results. Wall Street wasn’t impressed enough to keep buying.

The data analytics and AI software company watched its stock tumble over 12% in the five days following its November 3 earnings report. Shares dropped roughly 15% from pre-earnings levels.

Palantir Technologies Inc., PLTR

The numbers looked solid on paper. Palantir reported $0.21 earnings per share, crushing the $0.17 consensus estimate.

Revenue reached $1.18 billion, beating the $1.09 billion forecast. Year-over-year growth hit 63%.

The stock started rising after Monday’s release. Then it reversed during the earnings call, falling 3.6% in after-hours trading.

Burry’s Bearish Bet Rattles Investors

A regulatory filing added fuel to the sell-off. Michael Burry’s Scion Asset Management revealed put options on 5 million Palantir shares.

Burry gained fame predicting the 2008 housing crisis. His bearish position on Palantir sent a clear message to the market.

The timing hit hard. The filing surfaced right around earnings, amplifying downward pressure on the stock.

U.S. revenue drove growth in the quarter. Total U.S. sales jumped 77% to $883 million.

Commercial revenue exploded 121% higher. Government contracts grew 52%.

The company’s pipeline continues expanding. Total contract value closed in Q3 surged 151% year-over-year to $2.76 billion.

That represents a massive increase in future committed revenue. Demand for AI solutions remains strong.

Valuation Concerns Mount

The valuation question looms large. Palantir trades at a forward price-to-sales ratio of 110.

That’s an extreme multiple even for high-growth AI stocks. It assumes years of flawless execution and sustained growth.

Management raised full-year revenue guidance to $4.396 billion to $4.4 billion. Fourth-quarter revenue should reach $1.327 billion to $1.331 billion.

That projects 60.5% growth. Adjusted operating margin is expected to hit 52.4%.

GAAP earnings per share tripled from $0.06 to $0.18 year-over-year. Profitability continues improving.

The stock remains about 15.5% below its $207.18 all-time high. Year-to-date gains still exceed 130%.

Analyst reactions were mixed following the report. Several raised price targets while maintaining Hold ratings.

HSBC analyst Stephen Bersey increased his target from $181 to $197. He projects U.S. commercial revenue could reach $9.3 billion by 2029.

DA Davidson analyst Gil Luria lifted his target from $170 to $215. He praised Palantir’s leadership in applied AI.

The consensus rating stands at Hold. Three analysts say Buy, 11 recommend Hold, and two rate it Sell.

The average price target sits at $187.87. That implies about 7% downside from current prices.

U.S. government work generated $486 million in Q3 revenue. Commercial business contributed $397 million and is growing faster.

The private sector offers a larger market opportunity. However, corporate AI spending could slow during economic downturns.

Palantir closed $2.76 billion in total contract value during the third quarter, representing 151% growth from the prior year period.

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