Stock Story -
What Happened: Shares of data-mining and analytics company Palantir (NYSE:PLTR) jumped 5.1% in the morning session after the Bureau of Labor Statistics reported that the US producer price index (PPI - prices that businesses charge for their goods and services) in July 2024 increased 2.2% year on year, falling compared to the 2.7% y/y growth recorded in the previous month. The report also revealed a month-on-month growth of 0.1%, below analysts' estimates of 0.2%. In addition, Core PPI (prices excluding food and energy) were flat month on month. PPI is often considered a leading indicator of CPI since what businesses pay tends to be passed through to consumers. Overall, the data confirmed that inflation is cooling off. This is a favorable data point supporting an interest rate cut by the Fed. Notably, markets expect the first rate cut to be announced during the September 2024 policy meeting.
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. 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. After the initial pop the shares cooled down to $30.50, up 3.9% from previous close.
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What is the market telling us: Palantir's shares are very volatile and over the last year have had 33 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago, when the stock gained 19.3% on the news that 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.
Palantir is up 83.9% since the beginning of the year, and at $30.50 per share, has set a new 52-week high. Investors who bought $1,000 worth of Palantir's shares at the IPO in September 2020 would now be looking at an investment worth $3,210.
