Palantir (PLTR 3.19%) reported earnings this morning, and it delivered strong numbers and surprise beats across the board. The stock has been controversial since its direct listing in October 2020. I purchased this stock in the $9 range, and it ripped to $45 before plummeting back to the low $20s. I recently did a writeup and video on Palantir and said I thought the stock was an opportunity in the low $20s and a no-brainer below $20. Unfortunately, the stock did not fall below $20, and earnings has the stock up over 14% as I'm writing this.
Palantir has a cult following, and it reminds me somewhat of Tesla (TSLA 1.85%). Alex Karp, Palantir's CEO, is a quirky and intelligent guy, much like Tesla's Elon Musk. This is not necessarily a reason to buy the stock, but it is an important consideration for potential shareholders. Stocks like Tesla and Palantir often trade at unique valuations and carry more volatility. I expect this trend to continue, but if retail investors continue to own shares in their long-term investment portfolios, it could accelerate the share price over time, much as with Tesla. A premium is often paid for these "cult stocks." I am long Palantir, but I do understand the risks.
Another thing I think is interesting about Palantir is its hybrid crossover into cybersecurity. Of course, the company is not typically thrown into the cybersecurity stock bucket. After all, Palantir is a big data analytics software company that helps government agencies and companies manage and analyze data. However, with the increased hacks and high-profile security breaches, businesses are faced with complex challenges that require sophisticated solutions. Palantir offers highly secure data compared to most competitors. It started as a company laser-focused on government-related clients, so its solutions were built with security as the backbone. Commercial-focused vendors cannot say the same, and this provides a competitive advantage for Palantir. In my opinion, commercial clients are the key to Palantir's long-term growth, so this is an important fact to consider when you're evaluating the stock as a potential investment.
Here are the Q2 2021 earnings highlights from Palantir's press release:
- Total revenue grew 49% year over year to $376 million
- US commercial revenue grew 90% year over year
- Palantir closed 62 deals of $1 million or more, of which:
- 30 deals are $5 million or more
- 21 deals are $10 million or more
- 20 net new customers were added in Q2 2021, total customers were up 13% quarter over quarter
- Commercial customer count increased 32% quarter over quarter
- Cash flow from operations of $23 million, representing a 6% margin
- Adjusted free cash flow of $50 million, representing a 13% margin
- GAAP net loss per share, diluted, of -$0.07
- Adjusted earnings per share, diluted, of $0.04
In the below video, I break down Palantir's earnings report and offer my opinions on the company and its stock.
*Stock prices used in the below video were during premarket trading of August 12, 2021. The video was published on August 12, 2021.
