As you likely already know, Palantir Technologies (NYSE:PLTR) shares have taken a tumble following the AI software firm’s latest earnings release. Yet while we were a very optimistic in our Palantir stock earnings preview, it’s not as if we totally missed the mark.
For one, PLTR’s pre-earnings surge in price preceded a post-earnings plunge. Not only that, even if PLTR’s performance in the immediate term can be described as mixed at best, don’t let the market’s reaction convince you that it’s time to bail, ahead of further losses.
In fact, taking a closer look at the earnings release, it’s clear that Palantir’s latest results bolster rather than diminish the long-term bull case. The same goes for the company’s updates to outlook. All of this signals an opportunity for those willing to go against the grain.
Palantir Stock, Earnings, and the Market Reaction
Post-market on May 6, Palantir reported fiscal results for the quarter ending March 31, 2024. For the quarter, revenue came in at $634 million, a 21% increase compared to the prior year’s quarter, and ahead of forecasts calling for revenue of $615 million.
Adjusted earnings of 8 cents per share came in line with estimates, but these earnings represented Palantir’s largest quarterly profit in its history. Drilling down to the business unit level, Palantir reported 40% year-over-year growth for its commercial segment.
This represented some growth deceleration compared to last quarter, yet is still an impressive level of growth.
That’s not all. Last quarter, even Palantir’s governmental unit reported strong results. Government revenue increased 16% year-over-year last quarter, an acceleration from the 11% increase in year-over-year governmental revenue growth reported for Q4 2023. Along with these results, management also unveiled upward revisions to guidance.
So, with all this positive news, Palantir stock still sank right after these numbers hit the street as investors “bought on the rumor, sold on the news.” It’s possible that many speculators dived into PLTR before the earnings release with the intent of flipping it right after.
The Latest Price Action is Just Market Noise
Unfortunately for the speculators, with so many trying to profit from the Palantir stock earnings release, it’s not surprising that shares have pulled back just quickly as they ripped higher. However, make no mistake, this is just market noise. It’s not something that can give you an indication of where PLTR is heading from here.
Mostly, because like we said above, there was much contained in this earnings release to strengthen the long-term bull case. Even as commercial growth is slowing down, 40% growth is nothing to sneeze at.
Subsequent deceleration may arrive less quickly, given how successful Palantir has been in signing on new commercial customers for its Artificial Intelligence Platform.
The resurgence in governmental revenue stands to bode well for Palantir going forward. Palantir is well-positioned to benefit from the increasing use of AI in government operations.
Hence, high revenue growth, alongside outsized increases to Palantir’s bottom-line, appear set to continue. As we have argued previously, this growth will help sustain and add to PLTR’s valuation over an extended time frame.
The Verdict: Buy the Post-Earnings Dip
Palantir shares have dipped by double-digit after earnings, but that sounds worse than it is in actuality. PLTR has simply slid back from the mid-$20s per share, to pre-earnings price levels in the low-$20s per share.
At this price level, there is ample opportunity to profit, as long as you are patient. In the coming quarters, subsequent results and updates may elicit a more positive reaction from the market than we’ve seen in recent trading days.
For instance, governmental growth could keep accelerating. Or, Palantir’s sales partnership with Oracle (NYSE:ORCL) may also lead to growth re-acceleration for the commercial segment. These potential catalysts could be what sends PLTR back to $25, $30, or even higher per share.
In short, right now, buying the post-earnings dip is the correct course of action with Palantir stock.
Palantir stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.