Palantir stock falls amid valuation concerns despite Q4 outlook beating Wall Street estimates

Core Viewpoint - Palantir's stock experienced a decline following a solid earnings report, as analysts questioned whether the company's performance justified its high valuation [1][3]. Financial Performance - Palantir anticipates fourth quarter revenue of over $1.3 billion, exceeding Wall Street's expectation of $1.2 billion [2]. - The company expects adjusted operating income between $695 million and $699 million, significantly higher than the $575 million projected by analysts [2]. - Palantir raised its full-year revenue guidance to $4.4 billion from $4.15 billion [2]. - The firm reported third quarter revenue of $1.18 billion, a 63% increase year-over-year, surpassing the expected $1.09 billion [6]. - Revenue from US government contracts increased by 52% to $486 million, exceeding the $471 million forecast [6]. - The US commercial segment saw a 121% year-over-year revenue increase to $397 million, higher than the projected $342 million [6]. Market Reaction - Despite strong earnings, Palantir's stock fell over 6% in premarket trading, nearly negating a previous 7% increase following the earnings report [1]. - Analysts expressed concerns that Palantir's performance and guidance do not justify its high valuation, with shares up over 170% for the year and a forward price-to-earnings ratio of 230 [3]. Analyst Opinions - Jefferies analyst Brent Thill noted that the risk/reward is unfavorable due to the current valuation being vulnerable to fluctuations in the AI hype cycle, maintaining an underperform rating on the stock [4].