Palantir’s Record $870.5 Million Profit Fails to Reverse Stock’s Slide as Valuation Concerns Persist

Palantir revenue and profit blow past estimates, yet shares fall 19% YTD. Valuation at 97x earnings and insider selling outweigh institutional buying.

Palantir Technologies delivered a near-quadrupling of net income and revenue growth that blew past analyst estimates, yet its shares remain stuck in a prolonged slump. The disconnect between the company’s operating firepower and market reception is growing sharper by the week. While the software specialist keeps raising its own bar, investors keep pricing the stock as if it has already cleared the high jump.

The first-quarter numbers, released on May 4, tell a story of exceptional momentum. Revenue hit $1.63 billion, a 85% jump from a year earlier and well above the $1.54 billion consensus. Adjusted earnings per share came in at $0.33, topping the $0.28 expected by analysts. Net income reached $870.5 million, roughly four times the year-ago figure. Profitability also improved sharply: the operating margin now stands at 53%, while adjusted free cash flow for the quarter reached $925 million.

Management did not rest on those results. The full-year revenue guidance was raised to a range of $7.65 billion to $7.66 billion, above where the upper end of market expectations had been. For the second quarter, Palantir is targeting $1.8 billion in revenue. The US commercial segment was the standout, with revenue soaring 133% to $595 million. Government sales also remained a powerful engine, climbing 84% to $687 million, while the remaining contract value rose sharply, giving the pipeline a firmer base for upcoming quarters.

Yet for all that operational strength, the stock closed on Friday at €115.38 in European trading, a modest 0.70% gain that belies a year-to-date decline of 19.37%. The share price now sits well below its 200-day moving average of €139.63, and also under the 50-day average of €124.15. The relative strength index at 50.8 suggests the market is directionless rather than oversold, and the monthly loss of 4.28% extends a pattern of weakness. The 30-day annualized volatility of 54.25% underscores how aggressively the stock swings.

The valuation is the core of the problem. The shares still command 97 times expected earnings, and the price-to-sales multiple for the current year hovers around 40. Even on next year’s projections the ratio only falls to 28. For a company whose rule-of-40 metric hit an extraordinary 145% — combining revenue growth of 85% with a 60% profit margin — the market is effectively saying that no amount of current excellence can justify the price tag.

Insider activity adds another layer of caution. Manager Stephen Andrew Cohen sold 327,088 shares in the quarter, a sum that dwarfs the buying from institutional players such as SkyOak Wealth, which increased its position by 169.5%, and New York Life Investment Management, which accumulated 313,222 shares. The disparity between insider exits and institutional accumulation rarely reassures investors, especially at a stock with stretched multiples.

That tension will come to a head at the annual general meeting on June 3. Shareholders representing $336.1 billion in assets under management are pushing for resolutions that would require more detailed reporting on defense contracts and an independent human rights audit. Palantir’s board recommends voting against both proposals, citing legal and confidentiality constraints. The ESG pressure comes amid reports that the Dutch pension fund ABP has already sold its Palantir stake, and that some US public pension funds are also under pressure from beneficiaries.

Analyst views remain split. Rosenblatt Securities raised its price target to $225, arguing Palantir has a unique ability to make artificial intelligence practical for large organizations. DA Davidson took the opposite tack, cutting its target to $165 and warning that the valuation leaves no room for error.

The next big checkpoint arrives in August with the second-quarter report. For a stock that has seen its high-flying multiple come back to earth, the question is whether even a bigger beat can break the current funk — or whether the gap between operational performance and market sentiment has become structurally wider than a single earnings season can close.