Palantir Stock Earnings: PLTR shoots up 23% on profitability, but Citi warns on revenue

Palantir (PLTR) stock saw its largest rally in some time Monday evening after the big data firm reported a slight earnings beat and CEO Alex Karp said guided for the firm to be profitable for the full year. PLTR stock shot up nearly 23% to a high of $9.35 but ended the afterhours trade 16.8% ahead at $8.89. The session's high at $9.35 has not been reached since August of last year, making it a six-month high. However, much hinges on the United States Consumer Price Index (CPI) data for January that will be released before Tuesday's open. Consensus puts core CPI at 0.4% MoM.

Palantir stock news: In by a penny

Palantir did beat Wall Street expectations, but its much-heralded profitability was made true by just a hair. Palantir reported Q4 GAAP earnings per share (EPS) of $0.01 – that is right, profitable by a penny. Of course this is positive news for shareholders, who in line with Wall Street has been expecting a $-0.03 loss. On the adjusted EPS front Palantir also managed a one-penny win with $0.04 per share. The company has often achieved low-level adjusted losses and occasional adjusted profits but saw GAAP losses explode in 2020 only to be cut in half in 2021.

What is more, and by far more important, is that Palantir CEO Alex Karp told analysts to expect a real but small profit for the full year of 2023. Karp did not specify the GAAP figure but said Palantir would achieve between $481 and $531 million in adjusted income from operations for 2023.

"We promised you GAAP profitability in 2025, which you thought would be in 2027 perhaps," said Alex Karp on the earnings call. "We are now, in the last quarter GAAP profitable, and we plan to be GAAP profitable in this year."

This would come on the back of $2.18 billion to $2.23 billion in annual revenue the company forecasted, however, which was well below the $2.29 billion for 2023 estimated by Wall Street.

Still PLTR stock exploded on the good profitability news. Most traders were also positve about revenue, which came in at $508.6 million, about $3.6 million ahead of consensus. Revenue rose 18% YoY with US government sales rising 22% from the year ago period. This could become a problem for shareholders as the US government now accounts for 44% of the company's sales. The positive view though is that overall commercial revenue climbed 29% YoY, while overall government revenue climbed 19%. 

Source: Palantir

Palantir's total customer count grew 55% YoY in the quarter, and its sales team closed 61% more deals in fiscal 2022 than it did in the prior year. The market did not seem to be interested in the lower guidance for the first quarter however. Palantir guided for $505 million, whereas Wall Street had projected revenue of $520 million.

Citi did choose to ignore profitability news since it larglely stemmed from Palantir selling its Japanese operation for $44 million. Analyst Tyler Radke chose instead to focus on the company's lower revenue guidance and reiterated Citi's $5 price target on PLTR.

"]T]he stock’s still high valuation forces a revenue-based multiple orientation vs. Earnings/FCF, which we see increasingly at risk given the decelerating/mid-teens growth profile," Radke wrote to clients.

Palantir stock forecast

Palantir stock broke through the high from February 2 at $9.20 during the afterhours trade to a new 6-month high at $9.35. Though shares of PLTR sold off below $9 by the end of the session as traders booked profits, PLTR stock has once again move back to $9 in Tuesday's premarket. This is a sure sign that the euphoria is not over. Expect institutional buyers to join the fray and give PLTR a better floor. Currently, support is at $7.18 from September of last year.

If PLTR can break through the $9.35 high from Monday's afterhours trade, then bulls will likely push things up to the resistance band between $10.10 and $10.37. This regions stems from resistance experienced back during the summer of 2022.

PLTR 4-hour chart