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Here's Why Palantir Technologies Stock Jumped 21.3% Last Month

By Keith Noonan – Updated Sep 2, 2021 at 11:07AM

Key Points

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After some big swings, shares are now up roughly 13% year to date.

What happened

Shares of Palantir Technologies (PLTR -0.14%) climbed 21.3% in August, according to data from S&P Global Market Intelligence. The data technologies stock jumped after the company reported strong second-quarter results, and it continued to climb in subsequent trading. 

PLTR Chart

PLTR data by YCharts.

Palantir published its second-quarter results on Aug. 12 and delivered sales and earnings performance that came in ahead of the market's expectations. The company posted adjusted earnings per share of $0.04 on sales of $375.64 million, while the average analyst estimate had called for per-share earnings of $0.03 on revenue of $361.1 million. 

Charts and graphs on a visual display.

Image source: Getty Images.

So what

Palantir's revenue surged 49.1% year over year in the second quarter, and its adjusted operating margin of 31% trounced management's previous target for a margin of 23%. The company added 20 net new customers in the quarter and showed strong momentum for large-size deals. The data specialist's total customer count was up 13% on a sequential basis, and U.S. commercial revenue jumped 90% year over year.

Now what

Palantir stock has continued to gain ground early in September's trading. The company's share price is up roughly 2% in the month so far. 

Palantir expects to post revenue of $385 million in the third quarter, significantly ahead of the average analyst target for $380.13 million in sales that had been in place prior to the company's earnings release last month. The company expects to post an operating margin of 22% in the quarter.

Palantir now expects to post more than $300 million in adjusted free cash flow (FCF) this year, up from its previous target for more than $150 million in FCF for the period. The business is expanding at a rapid clip and generating strong margins, and management anticipates that sales will expand at an annual rate of 30% through 2025.

With the company valued at roughly $52.3 billion and trading at approximately 35 times this year's expected sales, Palantir clearly has a growth-dependent valuation. However, it's an early mover and leader in its corner of the data analytics industry and looks well positioned to take advantage of long-term trends. This growth story could still just be heating up. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Palantir Technologies Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Palantir Technologies Stock Quote
Palantir Technologies
PLTR
$7.11 (-0.14%) $0.01

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