Stock Story -
What Happened: Shares of data-mining and analytics company Palantir (NYSE:PLTR) jumped 19.3% in the pre-market session after the company reported a "beat and raise" quarter. Palantir blew past analysts' revenue, billings, and adjusted operating income expectations during the quarter. Moving on, it raised its full-year revenue and adjusted operating income guidance, beating Wall Street's estimates. Zooming out, we think this was an impressive quarter that should delight shareholders.
Is now the time to buy Palantir? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Palantir's shares are very volatile and over the last year have had 33 moves greater than 5%. But moves this big are very rare even for Palantir and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was a day ago, when the company dropped 16.7% as markets continued to decline. Yields also retreated as worries about a US recession grew. The declines followed volatility on Friday, August 2, when the July Non-Farm Payrolls data revealed weaker job growth as the unemployment rate rose. Markets might also be concerned that the Fed is behind in cutting rates, with the Federal Open Market Committee leaving rates steady at 5.25%-5.50% during the July 2024 meeting. For example, respected economist and University of Pennsylvania professor Jeremy Siegel took an aggressive stance, calling on the Fed to make an emergency 75 basis-point cut in the federal funds rate after Friday’s disappointing jobs report.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. However, the economy matters as well. Recessions can mean broad-based declines in demand for everything from consumer goods to enterprise software.
We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.
Palantir is up 64.5% since the beginning of the year, and at $27.30 per share it is trading close to its 52-week high of $28.81 from July 2024. Investors who bought $1,000 worth of Palantir's shares at the IPO in September 2020 would now be looking at an investment worth $2,870.
