What's going on?
Palantir – which provides the CIA and FDA with data analytics software – posted a suspiciously mixed earnings update on Tuesday, and it’s no secret investors weren’t impressed.
What does this mean?
Palantir’s government clients – which make up over half the company’s sales – have been using its tools more than ever in an effort to predict pandemic hotspots, allocate protective equipment, and distribute vaccines. But while that drove Palantir’s revenue to an expectation-beating 40% last quarter, it still wasn’t enough to offset its high costs – or to finally turn Palantir into the profitable business analysts have been waiting for (tweet this).
Why should I care?
The bigger picture: The future’s looking less bright.
Palantir relies on new contracts to keep its income stream flowing, and the firm’s freshly signed deals with BP and IBM should help with that this quarter. But investors – who initially sent its shares down 6% on Tuesday – might be concerned about the rest of the year: the company’s only expecting to grow its revenue 30% in 2021 – a significant step down from last year’s 47%.
For markets: Now it’s just the “lockup” to worry about.
Palantir’s share price has more than tripled since the company made its stock market debut last year, but things could be about to get more volatile. Like most firms, Palantir forced long-time shareholders to hold off selling their shares after it went public. That kept them from rushing to sell up, flooding the market, and depressing the company’s stock price. But when that “lockup” period expires later this week, 80% of the company’s shares will become eligible for trading – and that same scenario might end up playing out anyway.