Palantir Q1 preview: Where next for PLTR stock?

When will Palantir release Q1 2022 earnings?

Palantir is scheduled to publish first quarter earnings covering the first three months of 2022 on before US markets open on Monday May 9.

Palantir Q1 earnings preview

Palantir, the provider of data analytic software, has lost over 24% in value since its last quarterly update and the stock flirts with where it sat when it first joined the markets in late 2020. Although the company continued to acquire new customers and grow its topline at a faster rate than anticipated in its last set of results, its losses swelled and spooked investors that want the company to escape the red.

CEO Alex Karp attempted to assure investors on the last conference call that profitability was ‘within eyesight’, but he did not provide any timeline. Markets don’t seem convinced considering the steep fall in its share price and the fact consensus figures show Wall Street believes Palantir will not only remain in the red in 2022 but also in 2023.

Palantir’s net loss is forecast to amount to $98.9 million in the first quarter which, if delivered, would be the smallest on record.

Palantir has said it is aiming to deliver $443 million in revenue in the first quarter, up almost 30% from the year before and marking a new quarterly record. Consensus figures believe the company will meet this target.

There are two core elements to Palantir, one focused on serving businesses and the other providing services to the US government and its allies, including the UK. Analysts believe the commercial segment will report 43% revenue growth in the quarter to $190 million while sales to governments are forecast to continue to suffer from a slowdown and rise 22% to $254 million. The balance between the two divisions continues to be of interest to investors, with some hoping Palantir can grow its commercial segment at a faster rate and allow it to become larger than the government side of the business that has been a cause of concern for some since it went public due to its involvement with the military.

The government side of the business remains key for Palantir, but its commercial segment is also essential if Palantir is to deliver its ambition of delivering over 30% annual revenue growth through to 2025. It has recently announced it has partnered with Carahsoft Technology to help expand the reach of its products and services within the US government and expanded the scope of its relationship with the US Centers for Disease Control and Prevention.

The company has warned its adjusted operating margin would contract to 23% in the first quarter from the 29% booked in the previous quarter and over 34% the year before. As a result, Wall Street believes adjusted earnings per share will fall 14.6% to $0.03.

The outlook will also be a factor in how markets react to the results this week. Analysts forecast Palantir can target revenue of $487 million and an adjusted operating margin of 27% in the second quarter. Palantir is aiming to grow annual revenue by 30% or more through to 2025 and is targeting an adjusted operating margin of 27% in 2022, down from 30.7% in 2021.

Palantir’s quarterly updates are short-and-sweet, but attention on the conference call is likely to focus on the path to profitability and how it is progressing its work in Europe, which is growing at a much slower pace than in the US. The initial reaction to its new suite of Apollo products will also be a hot topic after the company launched them late last month.

Where next for PLTR stock?

Palantir stock was trading above $45 just over a year ago but is now trading just above $10 – where it started life as a public company back in 2020 - after sinking steadily lower over the past six months.

This remains the immediate floor and a key psychological level for the stock going forward. However, with the RSI in bearish territory and trading volumes having risen over the last 10-days, we could see the stock continue to come under pressure and that could bring the next downside target of $9.70 into play. Below there, the only level left is the all-time low of $8.90, which must hold to avoid opening the door to unknown territory.

The stock needs to recapture the $12 mark, in-line with the 50-day moving average, before it can look to break above the key levels of resistance that have emerged in 2022. From there, it can target $14.25, which acted as a ceiling throughout January and February, and then the April-high of $14.86 to install confidence of a move higher. 

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