Palantir (NASDAQ:PLTR) just reported earnings, and they were received very well. Yet, I'm downgrading to a "hold" from "buy" for a number of reasons. Over the years I've always found its business model with great potential for strong competitive advantages very enticing. The wildly different
Why I'm Downgrading Palantir Despite Blowout Earnings
Summary
- Palantir's U.S. commercial growth is impressive, with a 64% increase, overshadowing the anemic 4% growth in Europe, raising concerns about the company's international strategy.
- Despite strong earnings and increased guidance, Palantir's high valuation at 60x forward sales and 333x forward earnings necessitates sustained high growth to justify its price.
- The company's dismissive attitude towards its European performance and potential image problems could be hindering its growth, despite the high demand for AI solutions.
- Given the impressive U.S. growth but concerning European performance and high multiples, I am downgrading Palantir to a "hold" from "buy" as the risk-reward balance has shifted.
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