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This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
In his boldest move yet, Citron Research’s Andrew Left has bet against Palantir, calling it a “widow-maker” trade. Despite the risks, fortune favors the bold, and Left might just find success in this risky bet.
On Fox Business, Citron Research’s Andrew Left declared that he was now short on Palantir and added to his bearish position after the company’s latest earnings release, labeling his negative thesis as “obvious.”
To recap, Palantir has two specialized platforms: Gotham for government agencies’ data analytics needs and Foundry for enterprise data aggregation. The company also developed its bespoke Artificial Intelligence Platform (AIP), enabling integration of various LLMs within an organization’s operations.
Palantir recently reported a stellar quarterly earnings report, with Morgan Stanley noting: “Wow… is our reaction to Q2 results with nearly every headline metric and KPI accelerating versus Q1, which was already a very strong quarter.”
Palantir surpassed expectations on all metrics. It achieved its first billion-dollar quarter, reporting $1.004 billion in revenue against an estimate of $939.71 million, driven by 157 deals over $1 million, 66 over $5 million, and 42 over $10 million, which pushed its closed total contract value (TCV) to a record $2.27 billion, up 140% year-over-year.
Palantir’s commercial business is forecasted to reach over $1.302 billion in FY 2025, with Alex Karp aiming for a 10x growth rate over the next five years, implying a CAGR of 58%, according to UBS calculations.
Palantir’s guidance was impressive: it projects between $1.083 billion and $1.087 billion in Q3 revenue and raised its full-year guidance to $4.142 – $4.152 billion, with free cash flow projected at $1.8 billion to $2.0 billion.
During the earnings call, Palantir’s CEO identified three key tailwinds: custom AI application demand, data infrastructure investment, and defense tech modernization.
Palantir’s high valuation has been a challenge for years. Andrew Left sees an opportunity here, given its trailing P/E ratio of 614.57 and forward P/E of 294.12, compared to SAP’s trailing P/E of around 45.20.
Andrew Left is no ordinary short-seller. Citron Research ended its GameStop short campaign in January 2021 after losses but has notable successes like Nikola Corporation and Jumia Technologies, where it precipitated significant stock price drops before reversing its stance as the companies pivoted.
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