What happened
Shares of Palantir (PLTR +0.52%) were up by roughly 3.4% as of 1 p.m. ET Monday, after having been up by as much as 4.6% earlier in the session.
The big-data specialist's share price gains were apparently driven by CEO Alex Karp's 2022 letter to shareholders, which was published before the market opened. Investors seem to like what it said.
Image source: Getty Images.
So what
While the letter contained little in the way of detailed company-specific news, Karp laid out some commentary on Palantir's business and the software industry broadly. Among other things, he wrote:
Every large organization, in every industry and sector in the world, is becoming a software company, willingly or otherwise. There are no goods or services or government today without software.
As a result, the demand for software platforms that allow an institution to harness the productive capacity of its human capital and whose value persists and compounds over time has never been greater.
Karp also touched on Palantir's ability to serve large institutions, the elements that set the company apart from other Silicon Valley software players, and its role as a provider of services to the U.S. military and U.S. intelligence agencies. Investors eager to get a closer look at the data specialist's recent business performance won't have to wait long.
Now what
Even with Monday's gains, Palantir stock is still down by roughly 26% year to date.
Palantir now has a market capitalization of roughly $27 billion and is valued at approximately 13.5 times this year's expected sales. The company is set to publish its fourth-quarter earnings results before the market opens on Thursday, and the release will likely be the catalyst for a major stock price move.
When it published its Q3 results on Nov. 9, it guided for Q4 revenues of $418 million and a non-GAAP (adjusted) operating margin of 22%. That revenue target implies sales growth of roughly 30%, but the market clearly wasn't happy with the guidance; the shares are down by roughly 48% from where they stood on the day the company delivered it. The stock is trading at a markedly cheaper valuation now, but how investors will react to the fast-approaching Q4 results remains to be seen.
