Palantir Earnings to Test Stock’s Soaring Valuation After Rally

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(Bloomberg) — Palantir Technologies Inc.’s hefty premium will be in focus when the data analysis software giant reports earnings after the market close on Monday — with the stock trading at levels some see as difficult to maintain.

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Rebounding from a slump at the start of the year, the stock on Friday powered to a fresh record high, pushing its valuation to nearly 170 times forward earnings — more than 500% greater than that of the tech-heavy Nasdaq 100.

With Palantir’s ability to keep delivering significant growth seen threatened by rising competition and a weaker outlook in Europe, scrutiny is on earnings. The firm would have to accelerate growth by 50% for four years to hold its stock price, Jefferies analysts led by Brent Thill wrote in a Jan. 30 note.

“With Palantir trading at a significant premium to its peers, we believe any signs of decelerating growth could cause concern and subsequently lead to multiple compression,” Thill said. Palantir shares pared an earlier loss to climb about 1% higher in afternoon trading in New York.

Analysts see more than 30% downside for the stock over the next 12 months, according to data compiled by Bloomberg.

Around its earnings, the implied one-day move for shares is more than 13% in either direction, according to Bloomberg. Wall Street expects the company to report GAAP earnings per share of 3 cents, a decline from the year before, and $776 million in revenue, a 28% jump from the year prior.

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Bloomberg Intelligence analysts also see possible hurdles to Palantir’s growth. Momentum from US government contracts and its artificial intelligence platform could get weighed down by competition and softness in its international business, according to analysts led by Mandeep Singh.

Another issue for investors is insider sales — of which Palantir had the most of any S&P 500 Index company in the past three months, data compiled by Bloomberg show.

Palantir insiders sold about $4 billion in shares in 2024, a record, according to data from the Washington Service, with most sales taking place from September through the end of the year. While that makes up a relatively small portion of the company’s roughly $190 billion market value, who is selling is also important — the list includes early investors Peter Thiel and Chief Executive Officer and Founder Alex Karp.

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