Buy or Sell Palantir Stock Ahead of Earnings?

Company Overview - Palantir Technologies (NASDAQ: PLTR) is set to announce its Q2 FY'25 earnings on August 4, with consensus forecasts predicting earnings of $0.14 per share, up from $0.09 a year earlier, and revenues expected to grow 38% year-over-year to $939 million, driven by strong demand for its AI and big data platforms, particularly in the U.S. [2] - The company currently has a market capitalization of $373 billion, trailing 12-month revenues of $3.1 billion, operating income of $406 million, and net income of $571 million [3]. Financial Performance - In Q1, U.S. commercial revenue surged by 71%, while government revenue increased by 45%, reaching $373 million [2]. - Adjusted operating margins remained robust at 44% for the last quarter [2]. Stock Valuation and Sensitivity - Palantir's stock is trading at high valuation multiples, with a forward P/E ratio of approximately 270x, indicating sensitivity to earnings surprises and future guidance [3]. Historical Earnings Reaction - Over the past five years, Palantir has recorded 19 earnings data points, with positive one-day (1D) returns occurring approximately 53% of the time, increasing to 58% when analyzing the last three years [5]. - The median of the 10 positive returns was 21%, while the median of the 9 negative returns was -13% [5]. Correlation of Returns - Understanding the correlation between short-term and medium-term returns post-earnings can guide trading strategies, particularly if 1D and 5D returns exhibit high correlation [6].