Palantir’s (PLTR) stock price is now well underwater for investors who bought after its initial public offering. When the stock rallied above $25, analysts thought the stock would trade to $30-$32. Last week, the stock plunged after the company posted poor results. The CEO also confused retail investors during the conference call.
Palantir posted revenue of $432.8M, up by 34.4% Y/Y. GAAP net loss a share was 8 cents. Cash flow continues to underwhelm investors. At $93 million or a 22% margin, the software company’s business is too weak to justify a market capitalization in the $25 billion range.
The company highlighted closing 64 deals worth $1 million or more, plus 27 deals worth $5 million. Unfortunately, the company relies heavily on total stock-based compensation. Last year, the CEO cashed in nearly a billion dollars worth of stock. It has too weak a cash flow to pay more staff. Due to its complex solution, Palantir needs more staff to support its growing customers. With the stock at risk of falling to new lows in the weeks ahead, new employees may not want the stock compensation.
Nasdaq’s crushing decline in 2022 is fueling fears for unproven, unprofitable companies. PLTR stock is not likely to outperform the index. At best, it may spike on buyout rumors and temporary momentum.