The 8-Letter Word Palantir Investors Shouldn't Overlook When Analyzing Its Numbers

Core Viewpoint - Palantir Technologies has seen significant stock growth, trading up over 62% in 2025, driven by its AI platform and revenue growth, but investors should be cautious due to its reliance on adjusted earnings numbers and high share count [1][12]. Group 1: Financial Performance - Palantir's income from operations for the quarter ending March 31 was $176 million, which more than doubled to nearly $391 million when adjusted for stock-based compensation [6]. - The adjusted operating margin was reported at 44%, significantly higher than the unadjusted margin of 20% [6]. - The company's unadjusted net income was $214 million, translating to a per-share profit of $0.09, which is low compared to its stock price of $123.31 [9]. Group 2: Adjusted Earnings - Palantir heavily relies on adjusted earnings numbers, including adjusted operating margins and free cash flow, which can obscure the true financial performance [4][5]. - The use of adjusted figures can create a misleadingly positive outlook, as stock-based compensation is a relevant expense that should not be ignored [7]. Group 3: Valuation Concerns - Palantir's high share count, exceeding 2.3 billion shares, contributes to its expensive valuation, with a price-to-earnings multiple over 500 times trailing earnings [11]. - The stock is perceived as incredibly expensive on a per-share basis, raising concerns about potential corrections if market conditions change or if earnings reports disappoint [12]. - Despite strong business growth, there are better-priced growth stocks available, suggesting that Palantir may not be a good buy at its current valuation [13].