Palantir (PLTR) stock is falling after the company reported quarterly results, weighing on the wider market.
DA Davidson head of technology research, Gil Luria, tells Yahoo Finance the downturn has “nothing to do” with the fundamentals of the company; rather, it reflects a “risk-off vibe” among investors.
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00:00 Speaker A
concerns of course have been weighing on these palente palenteer shares despite the company topping third quarter estimates and raising its full year guidance. Joining me now is Gil Luria, DA Davidson head of Technology Research. And obviously Gil, there are two things going on here. There is the fundamental story of the company and then there’s the stock story of the company. On a fundamental basis, in these numbers, was there anything not to like?
00:24 Gil Luria
No.
00:25 Gil Luria
No, the results were spectacular. They exceeded any expectations anybody could have. This is a company that’s more than a $4 billion run rate growing 63%. It’s more than doubling its commercial business. And these aren’t little deals. They have some customers that spend as much as nine figures on Palenteer software. So companies are lining up to use Palenteer in order to achieve their AI goals. The government business grew 50%. The government’s still leaning more and more on Palanteer to achieve its own mission critical goals. The stock is down today. That has nothing to do with the fundamentals from last night.
01:03 Speaker A
Okay, so what does it have to do then? Is it just a valuation question? And this was sort of a sell the news kind of situation?
01:09 Gil Luria
More likely. I actually think it has nothing to do with Paer. To your point earlier, this is more about a risk off vibe today, nothing more than that. You can see a lot of the higher multiple more AI exposed companies stocks being down today. Uh again, I can’t imagine anybody expected Pantier to do better than they did last night.
01:32 Speaker A
I mean, but at the same time, what Pantier’s price to sales or something like 85, the highest in the S&P 500. even if this this company’s fantastic, does it deserve the valuation, the multiple that it has?
01:47 Gil Luria
You know, that’s the tough question because the uh both on a price to sales, price to earnings, uh EV to cash flow, there’s no way to justify Pantier’s valuation. It is completely divorced from fundamentals and from any other valuation of any other company. Which is understandable because they’re doing so much better than any other company. They are by far the best software company. Uh but the valuation it’s hard to justify. It’s hard to tie it to a cash flow, a discounted cash flow. It really is. Uh investors that buy Pantier are buying it because they expect the growth to continue uh for the foreseeable future and beyond. Uh it’s it’s a very individual investor-based stock. Uh and so it’s it’s very hard to argue should be trading at 80 times EV to cash flow, uh EV to sales, at 100 times EV to sales, at 60 times. It’s very hard to argue. These are all arbitrary numbers. and hence the challenge and hence a day like today where again, the results couldn’t have been better and the stock is down.
