Wall Street Panics Over 230x Valuation After Palantir’s Earnings Masterclass…

I’ll take “Things No One Understands But Will Invest In Anyway”, for $500 please… 

Palantir just reported an absolute CLINIC of an earnings showcase, proving once again that numbers don’t matter when your entire business model is mystique. In short, Alex Karp’s mad science experiment nailed $1.18 billion, which is 63% growth YoY. EPS came in at $0.21 versus $0.17 expected. And full-year guidance was raised across the friggin board. Translation: Every analyst note read like a confessional yesterday… “We were wrong, but it still feels wrong to be right.” 

Live look at analysts this morning... 

(Source: Giphy) 

And yet, the stock fell after hours (down -6% on the day). Why? Because what do you do with a company that’s already up 170% this year and trades at 230x earnings? You question the hell out of it… and call it sus. Of course, Alex Karp, in his usual state of theatrical defiance, opened the shareholder letter with violence. He called critics “deranged” and “self-destructive,” which is one way to describe people still trying to value Palantir using math.

(Source: Yahoo Finance) 

With that said, the U.S. government business grew 52% to $486 million. The commercial side in the U.S. more than doubled, up 121% year over year. Whereas, somewhere between “AI software for supply chains” and “targeting systems for drone strikes,” Palantir became the rare tech company that can literally move markets and missiles. But, but, but… Wall Street still doesn’t know how to categorize it. It’s too profitable to be a startup, too opaque to be defense, and too smug to be enterprise software. The valuation is absurd, but the demand is real. The company’s contracts with agencies that don’t legally exist are quietly stacking faster than analysts can adjust their models.

Case in point: Jefferies called the stock “unfavorable” and warned it’s “susceptible to any downtick in the AI hype cycle.” Which is funny, because Palantir is the hype cycle. It built the infrastructure that governments now rent their morality from. However, while the financials say one thing… the market says another. For Karp though… he could give a rats a$$. Which is either comforting… or extremely concerning. Only time will tell. 

(Source: Red Bubble) 

Meaning, keep your eyes on this one. Not because the valuation will make sense… it honestly doesn’t… but because it doesn’t have to. Palantir stopped being a software company years ago. It’s now a belief system with quarterly earnings. So place your bets accordingly, friends. Until next time…

At the time of publishing, Stocks.New does not hold positions in companies mentioned in the article.